What Does Articles of Incorporation Mean?
Articles of incorporation are a set of documents that are filed with the relevant government body to legally create a corporation. This document is a basic charter of the company that includes information such as the purpose of the organization, rights and liabilities of the shareholders, names of directors and their role within the organization and any other information that may be legally required.
Divestopedia Explains Articles of Incorporation
Articles of incorporation may follow laws that vary from state to state, so the creators should follow the local laws of their region with regard to the name, purpose and documents that must be furnished. For example, some states may not allow certain words to be part of the company's name if believed that it can affect the sentiments of any particular religion or community, is confusing or is too similar to an already existing organization.
Depending on what is needed, the documents that must be filed will also vary. There will be a fee for incorporation and a deposit for the first year's fee, both of which are paid at the time of incorporation. After verifying the details, the government entity responsible for incorporating companies will issue a formal certificate of incorporation, upon which, the company formally comes into existence.
If a company plans to issue stocks, then there is a separate procedure overseen by the Securities and Exchange Commission (SEC) that must be followed.
Once all of these procedures are complete, the company can formally begin its operations.