The articles of incorporation are essential documents that are required to be filed with a government body to legally document the creation of a corporation. In other states, these are sometimes called a certification of formation or a charter.
Essentially, the Articles of incorporation form a document that establishes a corporation as a separate business entity. Once filed, the articles become a public record. They provide important information about the corporation. This might include the name, contact information, and information about shares of stock. Corporations can not incorporate without it.
What Information is Included in the Delaware Articles of Incorporation?
Every state has a specific form for the articles of incorporation. You can find Delaware’s form on the website of the state agency. This is the Secretary of State that handles the business filings. It is good to note that if you are forming a nonprofit corporation, there are special articles of incorporation to form.
This type of legal document contains general information about the corporation such as:
- Name and principal office address.
- Purpose of the corporation. You can select a broad, general, business purpose for your corporation, it does not need to be specific.
- The duration of the corporation. If you do not plan to have the corporation exist indefinitely, then you can write this in the articles of incorporation. Oftentimes, people form a corporation that is designed to exist for only a limited period of time.
- Name and address of the registered agent and registered office. Having a registered agent is a requirement. This person is someone who has agreed to accept the service of lawsuits, as well as any other official documents for the corporation. In Delaware, your registered agent will be required to sign a document agreeing to act as an agent.
- List the names and addresses of the members of the board of directors. All corporations must have a board of directors.
- Information about the number and type of shares of stock the corporation is authorized to issue. This is important because it is often used to calculate taxes and fees.
- Names and addresses of the incorporators. An “incorporator” is one of the founders of a corporation. These are the people who sign the articles of incorporation during filing. This can be anyone and does not need to be an officer, director, or shareholder of the corporation.
- The incorporators’ signatures. All incorporates must sign the articles of organization in order for it to be accepted.
Importance of Articles of incorporation
Articles of incorporation are essential for any corporation because they establish a company. This is done within the state of Delaware, and the articles inform the state of the key aspects of the business. During filing, as the owner of a corporation, you are letting the state know your business’s purpose, the name, and address of the registered agent, the number of authorized shares and amounts of common stock, as well as the names of any incorporators.
What is the Difference Between Articles of Incorporation and Bylaws
The main difference between the Articles of Incorporation and Bylaws is that Articles of Incorporation are public records, Bylaws are not.
In Delaware, most businesses must file some sort of organizational document with the Secretary of State’s Office. This must be done before starting to do business in the State. These documents become public records that anyone can look at to find out who started the business.
Partnerships and sole proprietorships are not required to register with the state. The only time this is necessary is if they are planning to do business in any name other than the name of the owner. In this, a “fictitious name” registration must be performed.
Most businesses prefer to put a minimal amount of information about their company in public records. This detailed information about how the company will operate is in a company’s Bylaws. Corporations must have Bylaws and the Bylaws may include any provisions that are “not inconsistent” with Delaware’s corporate laws.
When it comes to LLCs, they are not required to have an Operating Agreement, and there are many items that “may not” be in an operating agreement. This might include unreasonably restricting a member’s right to business records, or eliminating the obligations of good faith and fair dealing.
Although it is not always legally required, having well-drafted Bylaws or an Operating Agreement is essential. These can help to clearly define the duties and responsibilities of the owners will help avoid future disputes.
How to File Articles of Organization in Delaware
Here is a step by step of how to file Delaware articles of organization.
- Choose a corporate name
- Prepare and file Certificate of Incorporation: Your corporation is legally created by filing a Certificate of Incorporation with the Delaware Secretary of State. Articles can be filed online or by postal mail. You must include a Filing Cover Memo. This will cost $89 up to 1,500 shares of no par value stock, or up to $75,000 of par value stock. After this threshold, the fee will increase based on how many shares your company has, or its value.
- Appoint a registered agent
- Prepare corporate bylaws
- Appoint directors and hold board meetings
- Issue stock: Delaware gives corporations the option of establishing a par value for their stock. This is also known as issuing no par value shares. Par value is a set amount below which the stock cannot be sold. This does not have anything to do with the value of the stock, but rather, it is an antiquated legal concept used in some states.
File annual report and pay franchise tax: The annual report filing fee for domestic corporations is
$50. There is also a franchise tax that is due upon filing
of the report.
- The filing fee for foreign corporations is $125, and the minimum franchise tax is $175. There is a maximum tax of $200,000.
- Corporations that owe $5,000 or more pay must pay estimated taxes in quarterly installments. 40% will be due June 1, with the following 20% due by September 1, the next 20% due by December 1, and the remaining due March 1.
- The penalty for not filing a completed annual report on or before March 1st is $100. Then, interest at 1.5% per month is applied to any unpaid tax balance.
- Foreign corporations are given a penalty of $125 if the annual report is not filed.
If you want help filing the articles of organization, our experienced business law attorneys can help. Contact us today to make sure you properly file your Delaware articles of organization.