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The Process of Creating a Corporation

December 14, 2016

 

The process of becoming a corporation, otherwise known as incorporation, has a number of important requirements that must be fulfilled. Below you will find requirements and commonalities that occur throughout the incorporation process. Incorporation requirements are codified in the California Corporations Code and can be found at:

http://www.leginfo.ca.gov/.html/corp_table_of_contents.html

 

Choosing A Name For Your New Corporation

 

The first step in incorporating your business is to pick a name for the corporation that is to be formed. This name cannot be the same as, or substantially similar to an existing corporation’s name. The corporate name you choose must also not be misleading to the general public in regards to what type of business your corporation will engage in. To make sure that the name of the corporation you plan on forming has not been taken, check with the California Secretary of State’s records.

 

Filing Articles Of Incorporation

 

After choosing the name of the corporation, the next step is to file what are known as articles of incorporation. Articles of incorporation are filed with the California Secretary of State, either by mail or in person. Generally, articles of incorporation must include:

  1. The corporation’s name.

  2. The corporation’s purpose.

  3. The name and street address of a registered agent for service of process purposes.

  4. The number of shares the corporation is authorized to issue.

The Appointment Of A Registered Agent

 

As previously mentioned above, every corporation must appoint a registered agent for service of process purposes. This is important not only for article of incorporation purposes, but also in the event the corporation is sued. The registered agent is either an individual, or another business entity that agrees to accept legal papers on behalf of your corporation.

 

The Creation Of Corporate Records

 

A corporate records book allows the corporation to keep all of its important documents in one single location. Important documents that might be found in a corporate records book include stock certificates and “minutes” recorded at director and shareholder meetings.

 

Creation Of Corporate Bylaws

 

Corporate bylaws can be thought of as rules and regulations governing the internal operation of your corporation. Although not legally required, it is often highly recommended that a corporation create bylaws to avoid conflicts down the road. Typical things found in a corporation’s bylaws include:

  1. Maximum or minimum number of directors.

  2. Selection and removal process of directors.

  3. The process for appointing or removing officers of the corporation.

  4. The process for dealing with internal or external conflicts of interest.

  5. The process for amending the bylaws.

  6. The process for dealing with a director or officer vacancy.

Appointment Of Initial Board Of Directors

 

An initial group of directors must be elected to sit on the board of directors. Depending on the corporate bylaws, many times the appointment of initial directors will last until the first shareholder’s meeting, at which time shareholder voting can determine the next group of directors to serve on the board. This process generally repeats itself every shareholder’s meeting. You must fill in an “Incorporator’s Statement” showing the names and addresses of the initial directors. The incorporator must sign the statement and place a copy in the corporate records book.

 

Holding The First Directors Meeting

 

The first meeting of the corporation’s board of directors should so that directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize issuance of shares of stock, set the corporation’s fiscal year, and adopt an official stock certificate form and corporate seal. The directors’ actions must be recorded in corporate minutes prepared by the incorporator or any of the directors.

 

Issuance Of Stock

 

Although not legally required, many corporations choose to issue stock to shareholders of the corporation.

 

The process of incorporating your business can be challenging and complicated, and this list by no means exhausts the range of possibilities available during the incorporation process. If you have any questions about the incorporation process, please feel free to contact Aziz Legal by phone or email at (408) 203-4627 or abid@azizlegal.com.

 

This article is merely informational and is not intended to be used as legal advice. Use of any information from this article is for general information only and does not represent personal legal or tax advice, either express or implied.  Readers are encouraged to consult Aziz Legal, or another attorney, for any specific legal matters.

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