Standard Oil Articles of Incorporation - 1870

corporate governance Corporate governance refers to the mechanisms, processes, practices, and relations by which corporations are controlled and operated by their boards of directors, managers, shareholders, and stakeholders. Definitions "Corporate governance" may ...

, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document that, along with the

memorandum of association The memorandum of association of a company is an important corporate document in certain jurisdictions. It is often simply referred to as the memorandum. In the UK, it has to be filed with the Registrar of Companies during the process of incorp ...

(where applicable), forms the company's

constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organization or other type of entity, and commonly determines how that entity is to be governed. When these pri ...

. The articles define the responsibilities of the directors, the nature of business, and the mechanisms by which

shareholders A shareholder (in the United States often referred to as stockholder) of corporate stock refers to an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the ...

exert control over the board of directors. Articles of association are essential to corporate operations, as they may regulate both internal and external affairs. Articles of incorporation, also referred to as the certificate of incorporation or the corporate charter, is a document or charter that establishes the existence of a corporation in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

and

Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...

. They generally are filed with the Secretary of State in the

U.S. State In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its so ...

where the company is incorporated, or other company registrar. An equivalent term for

limited liability companies A limited liability company (LLC) is the United States-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...

(LLCs) in the United States is

articles of organization The articles of organization are a document similar to the articles of incorporation, outlining the initial statements required to form a limited liability company (LLC) in many U.S. states. Some states refer to articles of organization as a cer ...

The articles can cover a medley of topics, not all of which is required in a country's law. Although all terms are not discussed, they may cover: *The issuing of

shares In financial markets, a share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Sha ...

(also called

stock Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...

) and the classes of shares, such as

preferred stock Preferred stock (also called preferred shares, preference shares, or simply preferreds) is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt ins ...

and

common stock Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other C ...

*The

dividend policy Dividend policy, in financial management and corporate finance, is concerned with Aswath Damodaran (N.D.)Returning Cash to the Owners: Dividend Policy/ref> the policies regarding dividends; more specifically paying a cash dividend in the pr ...

and the transferability of shares *Valuation of intellectual rights *How the day-to-day operations of the company are conducted, such as by a

board of directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...

. *The appointments of directors, which shows whether a shareholder dominates or shares equality with all of the contributors *Special voting rights of the

Chairperson The chair, also chairman, chairwoman, or chairperson, is the presiding officer of an organized group such as a Board of directors, board, committee, or deliberative assembly. The person holding the office, who is typically elected or appointed by ...

and their mode of election *Directors meetings, including the

quorum A quorum is the minimum number of members of a group necessary to constitute the group at a meeting. In a deliberative assembly (a body that uses parliamentary procedure, such as a legislature), a quorum is necessary to conduct the business of ...

number and the percentage of vote needed to pass a motion *Confidentiality and the founders' agreement with penalties for disclosure * First right of refusal for purchase rights and counter-bids by a founder. *Drag-along provisions, or when the majority shareholders force a sale on the other shareholders. *Determinations for the price paid for shares transferred following cessation of directorship or employment.

Directors

A company is run by the directors, who are appointed by the shareholders. Usually, the shareholders elect a

(BOD) at the

annual general meeting An annual general meeting (AGM, also known as the annual meeting) is a meeting of the general membership of an organization. These organizations include membership associations and companies with shareholders. These meetings may be required ...

(AGM), which may be

statutory A statute is a law or formal written enactment of a legislature. Statutes typically declare, command or prohibit something. Statutes are distinguished from court law and unwritten law (also known as common law) in that they are the expressed wil ...

(e.g. India and the UK). The number of directors depends on the size of the company and statutory requirements. The chairperson is generally a well-known outsider but they may be a working executive of the company, typically of an American company. The directors may, or may not, be employees of the company.

Shareholders

In present countries there are usually a few major shareholders who come together to form the company. Each usually holds the right to nominate, without objection of the other, a certain number of Directors who become nominees for the election by the shareholder body at the AGM. Shareholders may also elect Independent Directors (from the public). The chair would be a person not associated with the promoters of the company, a person is generally a well-known outsider. Once elected, the BOD manages the company. The shareholders play no part until the next AGM/EGM.

Memorandum of association

The Objectives and the purpose of the company are determined in advance by the shareholders and the Memorandum of Association (MOA), if separate, which denotes the name of the company, its Head-Office, street address, and (founding) Directors and the main purposes of the company for public access. It cannot be changed except at an AGM or Extraordinary General Meeting (EGM) and statutory allowance. The MOA is generally filed with a

Registrar of Companies A company register is a register of business organizations such as companies in the jurisdiction they operate under. Registration is normally mandated by the government of that jurisdiction. A company register serves a purpose of protection, acco ...

who is an appointee of the Government of the country. For their assurance, the shareholders are permit of the Memorandum of Association. Any matter in the Articles of Association not within the scope of the Memorandum of Association of the company is void.

Board meetings

The Board meets several times each year. At each meeting there is an ' agenda' before it. A minimum number of Directors (a

) is required to meet. This is either determined by the by-laws or is a statutory requirement. It is presided over by the

, or in their absence, by the vice-chair. The Directors survey their area of responsibility. They may determine to make a 'Resolution' at the next AGM or if it is an urgent matter, at an EGM. The Directors who are the electives of one major shareholder, may present their view but this is not necessarily so - they may have to view the Objectives of the company and competitive position. The chair may have to break the vote if there is a tie. At the AGM, the various Resolutions are put to vote.

Annual general meeting

The AGM is called with a notice sent to all shareholders with a clear interval. A certain quorum of shareholders is required to meet. If the quorum requirement is not met, it is cancelled and another Meeting called. If it at that too a quorum is not met, a Third Meeting may be called and the members present, unlimited by the quorum, take all decisions. There are variations to this among companies and countries. Decisions are taken by a show of hands; the chair is always present. Where decisions are made by a show of hands is challenged, it is met by a count of votes. Voting can be taken in person or by marking the paper sent by the company. A person who is not a shareholder of the company can vote if s/he has the 'proxy', an authorization from the shareholder. Each share carries the number of votes attached to it. Some votes may be for the decision, others not.

Resolutions

There are two types of resolutions, known as an Ordinary Resolution and a Special Resolution. A Special Resolution can be tabled at a Director's Meeting. The Ordinary Resolution requires the endorsement by a majority vote, sometimes easily met by partners' vote. The Special Resolution requires a 60, 70 or 80% of the vote as stipulated by the constitution of the company. Shareholders other than partners may vote. The matters which require the Ordinary and Special Resolution to be passed are enumerated in company or Corporate Law. Special Resolutions covering some topics may be a statutory requirement.

Various countries

The articles of association of a company, or

articles of incorporation Article often refers to: * Article (grammar), a grammatical element used to indicate definiteness or indefiniteness * Article (publishing), a piece of nonfictional prose that is an independent part of a publication Article(s) may also refer to: ...

, of an American or Canadian company, are often simply referred to as articles (and are often capitalized as an abbreviation for the full term). The Articles are a requirement for the establishment of a

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

under the law of

India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...

, the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...

Nigeria Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf of Guinea in the Atlantic Ocean to the south. It covers an area of . With Demographics of Nigeria, ...

Pakistan Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the List of countries and dependencies by population, fifth-most populous country, with a population of over 241.5 million, having the Islam by country# ...

and many other countries. In 1955, Together with the

, they are the constitution of a company. The equivalent term for an

LLC A limited liability company (LLC) is the United States-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...

. Roughly equivalent terms operate in other countries, such as ''Gesellschaftsvertrag'' in Germany, ''statuts'' in France, ''statut'' in Poland, ' (

Romanization In linguistics, romanization is the conversion of text from a different writing system to the Latin script, Roman (Latin) script, or a system for doing so. Methods of romanization include transliteration, for representing written text, and tra ...

: ) in

Ukraine Ukraine is a country in Eastern Europe. It is the List of European countries by area, second-largest country in Europe after Russia, which Russia–Ukraine border, borders it to the east and northeast. Ukraine also borders Belarus to the nor ...

, and ''Jeong-gwan'' in

South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...

. In South Africa, from the new Companies Act 2008 which commenced in 2011, articles and memoranda of association have been replaced by a "memorandum of incorporation" or "MoI". The MoI gives considerably more scope to vary how to the company is governed than the previous arrangement.

Canada

Articles of Incorporation are appended to a Certificate of Incorporation and become the legal document that governs the corporation. In

, the process of incorporation can be done either at the federal or provincial level. Companies which incorporate with the federal government will generally need to register extra-provincially in the province that they elect to do business. Similarly, a provincial corporation may need to register extra-provincially if they are to have offices outside of their home province. Incorporated Canadian companies can generally use either Corp., Corporation, Inc., Incorporated, Incorporée, Limited, Limitée, Ltd., Ltée, Société par actions de régime fédéral, S.A.R.F, in their name, but this may vary from province to province. The following information is required upon filing Articles of Incorporation in Canada: * Name of Business (Numbered and Named) * Head Office * Names and Residencies of Incorporators * Proof of Canadian Citizenship * Corporate Share Structure * Anticipated Business Restrictions

United Kingdom

Model articles of associations (A.O.A.)

In the United Kingdom, model articles of association, known as Table A have been published since 1865. The articles of association of most companies incorporated prior to 1 October 2009 – particularly small companies – are Table A, or closely derived from it. However, a company is free to incorporate under different articles of association, or to amend its articles of association at any time by a

special resolution In business or commercial law, an extraordinary resolution or special resolution is a resolution passed by the shareholders of a company by a greater majority than is required to pass an ordinary resolution. The precise figures vary in different ...

of its shareholders, provided that they meet the requirements and restrictions of the Companies Acts. Such requirements tend to be more onerous for

public companies A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange ( ...

than for private ones. In

Hong Kong Hong Kong)., Legally Hong Kong, China in international treaties and organizations. is a special administrative region of China. With 7.5 million residents in a territory, Hong Kong is the fourth most densely populated region in the wor ...

, the Companies Registry provides four samples of model Articles of Association, and they are known as Sample A, B, C, and D respectively. Sample A and B are both designed for a private company (the most common company type), Sample C for a public company, and Sample D for a company limited by guarantee.

Companies Act 2006

The

Companies Act 2006 The Companies Act 2006 (c. 46) is an act of the Parliament of the United Kingdom which forms the primary source of UK company law. The act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...

received

royal assent Royal assent is the method by which a monarch formally approves an act of the legislature, either directly or through an official acting on the monarch's behalf. In some jurisdictions, royal assent is equivalent to promulgation, while in othe ...

on 8 November 2006 and was fully implemented on 1 October 2009. It provides a new form of

Model Articles The Companies (Model Articles) Regulations 2008SI 2008/3229 are the default company constitution for limited companies under UK company law. The Model Articles will apply to a limited company if it does not register its own articles or, if it doe ...

for companies incorporated in the United Kingdom. Under the new legislation, the articles of association will become the single constitutional document for a UK company, and will subsume the majority of the role previously filled by the separate memorandum of association. The use of model articles for companies is not compulsory. If custom articles of associations are not registered, the relevant model articles apply by default from incorporation.

United States

History of corporations in the United States

After fighting the

American Revolution The American Revolution (1765–1783) was a colonial rebellion and war of independence in which the Thirteen Colonies broke from British America, British rule to form the United States of America. The revolution culminated in the American ...

with

Great Britain Great Britain is an island in the North Atlantic Ocean off the north-west coast of continental Europe, consisting of the countries England, Scotland, and Wales. With an area of , it is the largest of the British Isles, the List of European ...

, the founders of the United States had a healthy fear of corporations after being exploited for years by those in England. As a result, they limited the role of corporations by only granting select corporate charters, mainly to those that were beneficial to society as a whole. For the better part of the first one hundred years of United States history, the power of corporations was severely limited as owners could not own any stock or property, make financial donations to a political party, and legislators could dissolve a corporation at any time relatively easily. Corporations did not have the same corporate veil of protection that are enjoyed today. The shift towards corporations gaining more power and control happened as the United States progressed towards

industrialization Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...

. The

American Civil War The American Civil War (April 12, 1861May 26, 1865; also known by Names of the American Civil War, other names) was a civil war in the United States between the Union (American Civil War), Union ("the North") and the Confederate States of A ...

wildly enriched corporations and with this new wealth came bribes to legislators and courts that allowed for increased liability protection and other corporate protections. The 1886 Supreme Court case ''

Santa Clara County v. Southern Pacific Railroad ''Santa Clara County v. Southern Pacific Railroad Company'', 118 U.S. 394 (1886), is a United States corporate law, corporate law case of the Supreme Court of the United States, United States Supreme Court concerning taxation of railroad propertie ...

'' set the important legal precedent that corporations were “natural people” and as a result were protected under the 14th Amendment.

General information

The articles of incorporation outline the governance of a corporation along with the corporate bylaws and the corporate statutes in the state where articles of incorporation are filed. To amend a corporate charter, the amendment must usually be approved by the company's board of directors and voted on by the company's shareholders. The articles of incorporation typically include the name of the corporation, the type of corporate structure (e.g. profit corporation, nonprofit corporation, benefit corporation, professional corporation), the

registered agent In United States business law, a registered agent (also known as a resident agent, statutory agent, or agent for service of process) is a business or individual designated to receive service of process (SOP) when a business entity is a party ...

, the number of authorized shares, the effective date, the duration (perpetual by default), and the names and signatures of the incorporators. The state fee to file articles of incorporation to incorporate a profit corporation range from $50 - $300, and to incorporate a nonprofit corporation range from $0 -$125.

How to file

The first step in filing articles of incorporation is for the owners to decide which state to incorporate the business in. Once the state has been chosen, the documents with all the corporation's information have to be filled out, whether physically or virtually. Once completed, these documents will be reviewed by the secretary of state's office, and upon approval from the state government and payment of a filing fee, the company has officially become a legal corporation. The following information is required upon filing Articles of Incorporation in the United States: * Name of the Business * Location of Business * Whether or not the corporation is for profit * Names and Addresses of Incorporators * Names and Address of who will receive mail and where * Names and Addresses of Officers * A statement that summarizes the core purpose of the business * The number of authorized shares of stock * ''Other information may be required upon filing but this varies from state to state''

Where to file

Many corporations file in the state in which they are doing business, although this is not required by law. Corporations doing business in multiple states often file articles in the particular state that is the most lenient on corporations. A majority of public corporations in the United States file in

Delaware Delaware ( ) is a U.S. state, state in the Mid-Atlantic (United States), Mid-Atlantic and South Atlantic states, South Atlantic regions of the United States. It borders Maryland to its south and west, Pennsylvania to its north, New Jersey ...

Nevada Nevada ( ; ) is a landlocked state in the Western United States. It borders Oregon to the northwest, Idaho to the northeast, California to the west, Arizona to the southeast, and Utah to the east. Nevada is the seventh-most extensive, th ...

, although

Wyoming Wyoming ( ) is a landlocked U.S. state, state in the Mountain states, Mountain West subregion of the Western United States, Western United States. It borders Montana to the north and northwest, South Dakota and Nebraska to the east, Idaho t ...

is a popular choice as well. *Delaware: Over 60% of

Fortune 500 The ''Fortune'' 500 is an annual list compiled and published by ''Fortune (magazine), Fortune'' magazine that ranks 500 of the largest United States Joint-stock company#Closely held corporations and publicly traded corporations, corporations by ...

companies and 75% of new corporations every year are incorporated in the state of Delaware due to the state's favorable corporate treatment. The state's unique court, the Court of Chancery, allows corporate disputes to be heard without a jury within a reasonable time compared to non-corporate disputes. State corporate laws are very modern and specifically detail what a corporation is allowed to do, and as a result other states often try to emulate Delaware's legal corporate model. There is even further protection for corporations via the Delaware Asset Protection Trust in which personal assets are protected in the event of litigation. In order to abide by securities laws, some companies are even required to incorporate in Delaware. *Nevada: Despite having the highest registration fee in the United States and a negative stigma, Nevada is a very popular state for incorporation. The main reason for this is that the corporation does not have to pay any of the numerous state taxes. Similar to Delaware, some companies are mandated to incorporate in the state in order to be in compliance with securities law. Filing in Nevada also affords the corporate owners privacy as the state does not require names to do so. Unlike many other states, the corporation does not have to do business nor do any of the owners have to be a resident in the state to incorporate there. *Wyoming: The standard filing fees owed in the process of incorporating are zero in Wyoming, and the only fee owed is minimal compared to other states. Other favorable corporate laws include asset protection for owners as well as confidential information protection through requiring the usage of private data servers. Being a United States citizen is not a prerequisite for incorporating in the state, although there are countries of origin where businesses are ineligible. The state is one of the best in terms of fiscal health, and as a result corporation owners do not have to file personal income taxes.

Notes

External links

Legislation.gov.uk

Companies House
(for England, Wales and Scotland)
Articles of Association
(Table A) {{Authority control Corporate law United Kingdom company law Organizational documents Management cybernetics he:תקנון התאגדות pap:Statuto

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