Articles of Incorporation

The Articles of Incorporation also referred to as the Certificate of Incorporation or Corporate Chapter, is a document that establishes the existence of a corporation in the United States. This document is generally filed with the agency that is referred to in some states as the Secretary of State, the Department of State, or Division of Corporations.


The Articles of Incorporation does not need to be lengthy; legally all it needs are a few basic statements. Obviously, having lengthy Articles of Incorporation can make it harder to make changes in the corporate structure. It would be more convenient to keep the Articles short and just create a detailed set of by-laws.


What is a Shareholder

A shareholder is an individual or someone who owns one or more shares of stock in a corporation. They normally serve as officers and directors in the case of small corporations, but in large corporations, shareholders seldom assume these roles. In small corporations, sometimes shareholders cannot become directors or officers, as in the case wherein the shareholder who owns stocks in the name of one spouse while the other spouse is the business operator. Each state in the US has varying laws regarding shareholder’s rights, as well as specific laws regarding the issuance of stocks. Each shareholder is encouraged to meet once a year to elect company directors as well as be involved in the making of major decisions regarding the operations of the corporation.


Who are the Board of Directors

The Board of Directors is a group of individuals elected as representatives for shareholders, who jointly supervise the activities of an organization. They are the ones responsible for making major corporate decisions as well as electing officers of the company. Corporations in most states only have one director who holds all offices and usually owns all company stocks. Members of the board can also serve as the officers in the case of some small corporations.


The Board of Directors ideally should meet annually. Some examples of procedures needing the approval of the Board of Directors include:

  • Declaring dividends
  • Electing officers and determining their terms of employment
  • Amending bylaws and/or the Articles of Incorporation
  • Creation of corporate mergers, reorganizations, and other significant corporate transactions


Directors of Corporation usually owe “duties of loyalty and care” to the corporation. What this means is that a Director must always act in good faith, with reasonable care, and always having the best interest of the corporation in mind. A director is instructed to disclose any information with regard to having any personal gain with any transaction done by the corporation, thus if possible, the Director is advised from voting on this matter.