What are 'Articles Of Incorporation'
A set of formal documents filed with a government body to legally document the creation of a corporation. Articles of incorporation must contain pertinent information such as the firm’s name, street address, agent for service of process, and the amount and type of stock to be issued. Articles of incorporation are also referred to as the "corporate charter," "articles of association" or "certificate of incorporation."
BREAKING DOWN 'Articles Of Incorporation'
Most states also require the articles to state the firm’s purpose, though the corporation may define its purpose very broadly to maintain flexibility in its operations. Amazon’s certificate of incorporation, for example, states that the corporation’s purpose is “to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.” Other provisions outlined in a company’s articles of incorporation may include limitation of directors’ liability, actions by stockholders without a meeting and authority to call special meetings of stockholders. Each state has certain mandatory provisions that must be contained in the articles of incorporation and other optional provisions that the company can decide whether to include. The corporation also must pay the state a fee to incorporate and may have to pay a corporate franchise tax as well.
In the United States, articles of incorporation are filed with the secretary of state in the state where the business chooses to incorporate. Some states offer more favorable regulatory and tax environments and, as a result, attract a greater proportion of firms seeking incorporation. For example, Delaware and Nevada attract about half of public corporations, in part because of the tax advantages they offer, and also because shareholders, directors and officers aren’t required to be residents in these states.
Another key corporate document is the bylaws, which outlines how the organization is to be run. Bylaws work in conjunction with the articles of incorporation to form the legal backbone of the business.