Business, Legal & Accounting Glossary
A document, filed with a U.S. state by a corporation’s founders, describing the purpose, place of business, and other details of a corporation. also called articles of incorporation or charter.
A corporate charter, also known as a “charter” or “articles of incorporation,” is a written document filed by the founders of a corporation with the Secretary of State (or registrar in Canada). It includes information about a company’s major components, such as its objectives, structure, and planned operations. If the state approves, the corporation becomes a legal entity.
The process of creating corporate charters is the first step in forming a new corporation. Corporate charters serve as the foundation for the formation of a new corporation. A corporation becomes legitimate and legal once it is filed and approved. The document must be created and filed before the corporation can conduct business.
If the corporate charter is not created prior to the start of the business, the owners expose themselves to risk, including personal liability for all potential damages and debts incurred by the business during the period during which the corporation operated without a valid corporate charter.
At its most basic level, the corporate charter contains information about the corporation’s name, purpose, whether it is a for-profit or nonprofit organisation, its location, the number of authorised shares, and the names of the parties involved in the formation. Corporate charters are filed with the secretary of state in the state in which the corporation is incorporated. Typically, the state in which the business is located charges a filing fee for the corporate charter to be processed.
Certain government websites include corporate charter templates. However, some businesses consult with and hire business lawyers when creating and filing corporate charters to ensure that their legal business documents and environments are more legitimate and favourable.
The state in which the corporation is incorporated has specific requirements regarding the corporate charter’s provisions. Certain states require the inclusion of “Inc.” or “Incorporated” depending on the type of corporation. Additionally, the charter contains the name of the authorised agent. Regardless of its location, a corporation must have a designated registered agent who serves as the authorised receiver of the corporation’s critical legal documents.
Corporations must justify their formation. This statement describes the corporation’s operations, industry, and the products and services it provides.
Apart from appointing a registered agent, the corporate charter must include the founders’ names and addresses, as well as those of the corporate officers and initial directors.
Additionally, corporations designated as stock corporations must disclose the number of authorised stock shares and the par value of each share.
You need to make sure that you fully understand everything that is involved in any corporate charter you take on.
Our corporate charter was really well organized and I thought it was very efficient and lucid too and would work well for us.
We looked over the draft of the corporate charter in the evening and found it to be an excellent document, one that we would be proud to submit.
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This glossary post was last updated: 25th January, 2022 | 0 Views.