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Understanding The Article Of Incorporation

Aug 17, 2007
An Article of Incorporation or Certificate of Incorporation is the set of rules that help govern management, and you file it with the governing authority, which is either the state or the particular regulatory authority. An Article of Incorporation covers the basics of the inception of the company like the board of directors, details about the number of shares, and its ownership. Although the rules and bylaws vary among different states the basic draft remains almost same.

What an Article of Incorporation Covers
Article of Incorporation covers the following necessary details that are to be disclosed while filing for Incorporation:

The name of the Incorporator or the person, who is organizing the company.

The details of share holders including the amount of shares they own.

The details of The Board of Directors.

The details of the registered officer, the company's legal representatives, and the authorized signatory of the company.

Key Provisions
The whole process of Incorporation authorizes a group of people coming together to work on a particular segment in a particular manner, as a legal entity. The company proposes to the registrar of Aboriginal Corporations, after the registration and the authorization from the Government authority, that the incorporation is in place and the company is incorporated. By incorporation under the Aboriginal Councils and Association Act of 1976 (ACA Act) a company can reap the following benefits:

The members of the corporation may not be held accountable or liable for the corporation's debts, if the promoters disclosed this intent at the time of registration.

The members of the corporation consider or impose the customs of the state in some cases, or they provide a provision to consider such a tradition and take care not to disturb it.

An indigenous corporation is authorized to operate across states in the whole country.

There may be provisions for particular domain corporations rendering them exempt from filing annual financial statements.

The cost of filing for incorporation is less.

The registrar of Aboriginal Corporations can provide client assistance & support

Key Features
The Registrar and the Securities and Exchange Commission (SEC) document and monitor the laws related to the buying of securities or selling of them. Issues like designating the number of members for a majority, public offerings, and the plan for public offerings, also find attention in the act. They include guidelines related to the proxy solicitation and mergers in the act, and subsequent by-laws. Voting rights, dissolution issues, issues related to dividends for the shareholders, and the division of profits, are adhered to. The act also defines indemnification and the limitation of liability of the directors and the officers, contracts, advancement of expenses, interpretations of bylaws, and the incapability of a few certain provisions.

Additional Help
There are software packages available for entities, which intend to become corporations. This software helps with the required documentation and other compliance related issues, to make the work more smooth and streamlined.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
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