Incorporating a new company is accomplished by filing articles of incorporation with the appropriate government department, along with the appropriate information and fees.
While the corporation is created by filing Articles of Incorporation, the internal organization must be done separately and maintained following the corporation’s creation. It should be determined ahead of incorporating who will be appointed as the Directors, and Officers of the corporation, as well who will be issued shares in the corporation and in what amounts or ownership percentages.
Directors of a corporation are the individuals in charge of managing and supervising the affairs of the corporation. They provide direction and instructions to the employees and management of the company. Directors are appointed by the shareholders of the company and can be voted out by the shareholders, if need be.
Officers of the corporation have the ability to bind the corporation, by signing on its behalf and making representation on behalf of the corporation. In most cases, the Officers of the Corporation consist of the President, Vice-President, Treasurer and Secretary of the company.
Shareholders of the corporation own the equity of the corporation. Different classes of shares can be issued, that carry with them different rights and obligations. Generally speaking, as the value of the company grows, so too does the value of the shares.
In the situation where only one individual has incorporated a company on his or her own, he or she can occupy all the positions of Directors, Officers and Shareholders of the corporation.
Ensuring that a Corporation is organized correctly from the date of its incorporation will avoid unnecessary costs later on. It also forces you, as the corporate organizer, to look to the future and contemplate how you want the Corporation to grow and who you want to benefit from that growth.
Where multiple individuals wish to incorporate a company together, consideration should be given to whether a shareholder’s agreement is entered into.