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The articles of incorporation are the combination of documents filed with a government authority to legally establish the formation of a corporation. They are also known as a certification of incorporation or a charter.

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What are the Article of Incorporation?

This type of public document comprises general information regarding the company, such as its name and location of the company. 

Articles of incorporation are sometimes confused with bylaws, which outline the rules and regulations that govern a corporation and assist in defining the roles and responsibilities of the company’s directors and executives. 

The bylaws, along with the articles of incorporation, provide the legal foundation of the business.

What is the significance of articles of incorporation?

Articles of incorporation are significant because it is used to set up a company within its home state while also informing the state of the fundamental characteristics of the company. 

The business owner informs the state of the purpose of the corporation, the name and address of the board, the number of authorized shares and values of common stock, and the names of any incorporators upon filing.

Some states will also ask for a copy of the company’s bylaws. By describing the rights and obligations of the shareholders and board of directors, the bylaws serve to keep a business working efficiently. 

Articles of incorporation help a business owner in various ways. Making your firm a legal corporation protects you from the company’s debts.

How to understand Articles of Incorporation?

Many firms in the United States and Canada are established as corporations. To be legally recognized as a corporation, a business must incorporate by following specific stages and making certain decisions as prescribed by corporate law. One such process is the filing of articles of incorporation.

Articles of incorporation is the document required to register a company with a state and serve as a charter to acknowledge the formation of a corporation. 

The document provides the fundamental facts required to create a company, corporate governance, and corporate legislation in the state where the articles of incorporation are filed.

What are the terms included in the articles of incorporation?

The following information is included in articles of incorporation, with slight modifications depending on the state:

  • Company’s name.
  • Corporation’s registered agent’s name and address 
  • The corporate structure type (which may include a designation of your business as a nonprofit corporation, non-stock corporation, or other categories).
  • All members of the company’s board of directors’ names and addresses.
  • The kind and number of authorized shares accessible to the business.
  • The duration of the company’s operations (if it is not permanent).
  • The business owner’s name, signature, and address are required.
  • The jurisdiction of the company
  • If you are not the business’s incorporator, you will submit this information to the incorporator instead.

Following the establishment of their corporate standing, some businesses may desire to change their articles of incorporation. This is possible through the use of a restatement, often known as restated articles of incorporation.

When can the articles of incorporation be used?

The articles of incorporation separate the ownership of the business from the business. It establishes the business as a separate legal entity. 

Incorporating decreases a company owner’s risk since the business becomes financially and legally accountable for its debts in the event of a lawsuit.

Articles of incorporation can be filed by any form of business. A new company may be formed as a corporation, or a company formed as a sole proprietorship may subsequently become a corporation. 

It can help the company to raise funds from the public as it increases the reliability of the company with its subscribers.