Importance of Articles of Incorporation

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Contents Of Articles Of Incorporation

Every company has to be incorporated from scratch. Incorporation therefore means the process by which a new company is formed and is given the status of a legal entity which is seen equal to a person under the law.

Company here can be a business entity which strives to make profit and shareholders wealth optimization; it can also mean a non profit organization or a club.

Most companies have the word ‘Incorporated’ or ‘Corporation’ to their name. This shows they have legally gone through the process of Incorporation.

In this article we will deal with a tool of incorporation which is needed for a company – the Articles of Incorporation:

An Article of Incorporation is known by many names such as Certificate of Incorporation, Letters Patent or the Corporate Charter of a company etc. Articles of Incorporation are a set of documents which enlists a set of rules which govern the functioning of a company as per the legal norms of the country where it is incorporated.  Article of Incorporation has to be filed with the Company Law Board or any such related regulatory agency of the Country.

The Articles of Incorporation usually give a picture about the nature of the business, its contact location that is principal place of operation, stock details etc. Once you put all relevant details in your Articles of Incorporation you have to pay a registration fee ranging between USD 25 to USD 1000.

The fee of course depends upon the respective State rules. Once the Incorporation process gets through successfully you will get the certified copies of the Articles of Incorporation back from the State Department where your company is registered.

Articles of Incorporation have many sections which require information to be filled as per your business nature as well as sections which provide you with explanation of existing rules. For example Article 1 asks for your Business Name and the registered office. Article 2 asks for your real business purpose.

You can state your business objective here in clear defined terms. Next you can see details about the limitations that you may face as a corporate. These limitations work as conditions which can restrict the operations and activities of your business under specific conditions. In the next article you will have to provide details about your Directors or Board members and their voting rights, if any. And so on and so forth.

Now what are the benefits of Articles of Incorporation? The most important advantage that you can get as a business owner is the protection of your personal assets. Incorporation process requires Articles of Incorporation and once you get incorporated you can separate your business assets from your personal assets.

This means as the business owner you are not personally liable to any of your business creditors. Articles of Incorporation hence are very important. Any wrong information given in it by your business and you may lose not just your business but may be personally liable to your creditors as you may not be considered as a legal corporate under the law.

 

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