What is a Certificate of Incorporation and Bylaws?

A corporation is considered to be formed when a Certificate of Incorporation is filed with the Department of State. It is a brief document which addresses the basics such as the name of the entity, address, total number of shares being authorized, the address of a registered agent for a service of process, the general statement of business purpose (usually to conduct any legally allowed activity).

 

However, certain provisions that may be desirable to business owners may not be enforceable if they were not included in the filed Certificate of Incorporation even if they are stated in other corporate documents. Such provisions are indemnification, pre-emptive rights, voting rights, supermajority voting, limiting the powers of directors or stockholders, and others. For this reason, among others, it is important that the company is being formed by an experienced business attorney, not one of the online services, which file the basic simplest document required by the state to effectuate the registration and do not have any responsibility to its customers for the consequences.

 

Bylaws set forth various procedures relating to the governance of the corporation, such as duties and responsibilities of the directors and officers, number of directors to be elected, how director and shareholder meetings will be called, voting and proxy, where corporate books will be held, notices to be submitted and other general corporate matters. Bylaws do not regulate the relationships between shareholders towards each other and the company, do not grant or restrict any shareholder rights and responsibilities and do not address any other matters relevant to the ownership of the company’s shares. Such matters are included in the Shareholder Agreement.

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