The process of forming a corporation involves filing the Articles of Incorporation with the relevant state agency and getting it accepted. This step is crucial as it establishes the existence of the corporation. It’s a common misconception that simply filing the Articles of Incorporation is enough to create a corporation. To avoid this, it’s important for counsel to check the date of incorporation as recorded in the certificate of incorporation and on the state agency’s records, typically the Secretary of State, though some states have different departments handling this such as financial regulation or Attorney General Office. The state government website provides information on the correct agency and its location.
The Articles of Incorporation can be submitted either electronically or in hardcopy. Each state has specific instructions for filling out and submitting the Articles of Incorporation, as well as the filing fees, payment methods, instructions for certified copies, expedited processing options, and a template for a standard Articles of Incorporation. This information can be found online.
Most states allow a corporation to file a correction to the Articles of Incorporation if there is an error, as long as it is done within a specified time frame after the initial filing. For example, in Virginia, “Articles of correction may only be accepted and filed within 30 days of the effective date of the original certificate.” Meanwhile, in Delaware, you can file either a Certificate of Correction to make a correction in the articles, or a Corrected Certificate which corrects the original certificate and recites the entire articles with the correction. The fees for making a correction are usually nominal, usually under $100 in most states. In some cases, when a correction cannot be made or is too complex, amending or restating the Articles of Incorporation is an alternative option. Generally, a correction does not require shareholder approval unless it materially changes the meaning or scope of the articles, though some states exempt correction from shareholder approval.
Amendments and Restatements
Most states provide instructions and templates for amending or restating the Articles of Incorporation online. If a corporation has made multiple amendments to its Articles, it is often simpler to consolidate them by amending and restating the Articles, resulting in a single, updated, and clear document. In most cases, amending or restating the Articles of Incorporation requires approval from the shareholders.
In Delaware, you can find a template for amending the Articles of Incorporation at the following URL: https://corpfiles.delaware.gov/amend09.pdf.
In California, a template for restating the Articles of Incorporation can be found at this URL: https://bpd.cdn.sos.ca.gov/corp/pdf/amendments/corp-reststk.pdf.
In Florida, a template for amending the Articles of Incorporation is available at: http://form.sunbiz.org/pdf/cr2e011.pdf.
In Texas, a template for amending the Articles of Incorporation can be found at: https://www.sos.state.tx.us/corp/forms/424_boc.pdf.
Walking away from a failed business without formally dissolving the corporation can lead to future lawsuits against the corporation and its owners for corporate debts and liabilities. It leaves the company and its owners open to legal action and potential financial liability. Formal dissolution of the corporation ends its legal existence and bars the bringing of future lawsuits against the corporation, protecting its owners from liability.
This process typically requires board and shareholder approval, payment or provision for corporate liabilities, and filing of articles of dissolution (or certificate of dissolution in some states) with the state government. State laws also require published notice of the dissolution, either through a local newspaper or by sending a written notice to all claimants of the corporation, to establish a public record of the dissolution. There may be provisions for processing claims against the dissolving or dissolved corporation before a deadline for assertion of claims, and protecting the dissolved corporation from unknown claims.
Some states have a short form option for dissolution if certain conditions are met. Templates for articles or certificate of dissolution can be found online.
- For Delaware: https://corpfiles.delaware.gov/web275_09.pdf
- For Florida: http://form.sunbiz.org/pdf/cr2e012.pdf
Note that it is important to also check the relevant statutory sections and administrative rules in the state before filing articles or certificate of dissolution, as the requirements can vary.