Definition: Articles of incorporation are often used to set up new businesses, acquire assets, or even settle existing disputes. Thus, articles of incorporation are for two primary purposes: to create a legal framework for the management and operation of a business and provide a formal training program for new directors.
Businesses formed under the Articles of Incorporation will need to satisfy various requirements depending on the type of business they plan to create. All incorporations must contain the following three items: the name of a sole proprietorship, the street address of the primary place of business, and the agent for service of process.
The main purpose of articles of incorporation is to create structures that make it easier for investors to benefit from a company’s business activity. These articles ensure that investors get paid when the companies raise money through bonds or a preferred stock sale. For example, investors can take part in acquisitions without giving substantial shares upfront. Business owners can create articles of incorporation for many different reasons, including increasing a company’s stock value, preventing a hostile takeover, or complying with tax regulations.
The articles of incorporation contain the legal details of how a company is created. It is customary to include the company’s name, type of corporate structure, and number and type of authorized shares in the articles of incorporation with any new corporation you form.
Incorporation is a major step in creating a business entity that legally wields power over other individuals and businesses. The specific steps necessary to incorporate a business will depend on the type of business, but there are some general steps that all businesses should take. These steps form the basis of any discussion or legal battles that might occur between you and other parties after your incorporation.
When starting up a business, it is vital to understand your legal rights and responsibilities. The articles of incorporation create the legal foundation for your company, including how much control you have over its day-to-day operations. The bylaws also set out responsibilities for each company officer and director and key employees (managers, company officials, consultants). The aim of the articles of incorporation is to lay the legal groundwork for your business and allow you to form a legal entity with a set of professionals who will contribute to its success.
Simply put, they’re documents that set out the basic rules for your new company. The articles of incorporation can be either general or specific to a specific company. There are several different types of articles of incorporation, each with slightly different requirements and benefits.