Organizing a Corporation

Organizing a Corporation

A Guide to Success

Types of Corporations

There are three types of corporations:

Domestic

Foreign

Alien

A corporation can have all three designations.

Incorporating: Where and How

A business can incorporate in any state they wish, but normally like to stay close to customers.

Some states are considered to be more “Business-friendly”

Most states require at least 3 incorporators in order to charter.

Traditional Articles of Incorporation

Name and Address of the corporation

Corporate Objectives

Type and Amount of Stock to Issue

Expected Life of the Corporation

Financial Capital at the Time of Incorporation

Provisions for the Transferring Shares of Stock among Owners

Provisions for Regulating Internal Corporate Affairs

Address of the Business Office Registered with the State of Incorporation

Names and Addresses of the Initial Board of Directors

Names and Addresses of the Incorporators

Page 157 in text; Boone and Kurtz

Levels of Management

The five levels: Stockholders

Board Of DirectorsTop Management

Middle ManagementSupervisory Management

Stock Ownership and Rights

In closely held corporations stock is generally unavailable to outsiders and stockholders also manage all of the company’s activities

In publicly held corporations stock is sold to the general public. Public held corporations will usually hold an annual stockholders meeting. This gives the stockholders to vote on any issues that require their approval.

Board Of Directors

Elected by stockholders

Sets overall policy, authorizes any major transactions, and hires the CEO

Inside Directors: Normally employed by the company as an executive

Outside Directors: Not employed by the company but usually stockholders.

Middle and Supervisory ManagementWhile CEOs make most of the corporate

decisions, middle management handles the ongoing operational functions of the company.

Leaving the day-to-day management to the supervisory personnel. They hand out assignments to employees and give out performance reviews.