1. Chapter Eight Formation of Corporations

2. Things to consider when forming a corporation include:  Preincorporation activities by promoters  Selection of jurisdiction in which to incorporate  The corporate name  Articles of incorporation  Post-incorporation activities: bylaws, corporate supplies, organizational meetings

3. What is a Promoter Promoter: Promoter: One involved in forming a corporation and organizing its structure (also called incorporator)

4. The Corporate Name  Promoters must select a name for the new legal “person” or entity they are creating  Determine if name is available in the state of incorporation  Reserve the name for the prospective corporation while articles of incorporation are being prepared  Register the name, to reserve it in a foreign jurisdiction  Apply for any assumed names

5. Elements of Articles of Incorporation  Name  Address  Agent for service of process  Purposes  Description of stock  Incorporators

6. Information Needed to Prepare Articles of Incorporation  Determine the identity of incorporators  Determine the principal address of corporation within the state of incorporation  Identify registered agent  Identify initial shareholders  Identify initial directors  Identify stock of company  Common or preferred stock  Number of authorized shares  Par value or no par value

7. Agenda for First Organizational Meeting Slide 1 of 2  Election of directors  Appointment of officers  Adoption of bylaws  Acceptance of preincorporation stock subscriptions  Acceptance of preincorporation contracts  Approval of corporate seal and form of stock certificate

8. Agenda for First Organizational Meeting Slide 2 of 2  Banking and accounting information  S Election  Confirmation of Section 1244 stock  Issuance of stock

9. Key Features in Forming Corporations Slide 1 of 3  Corporations are planned and organized by promoters. Agreements made by promoters bind the promoters personally until they are released from liability thereon.  Interested investors often offer or subscribe to purchase stock when the corporation is later formed. The offer is irrevocable for some period of time.  Consideration should be given as to the jurisdiction in which to incorporate. Some states have laws that are more flexible and permissive than others.

10. Key Features in Forming Corporations Slide 2 of 3  The corporate name must usually include a signal showing the entity is a corporation. The name should be reserved prior to incorporation.  The document that creates a corporation is called the articles of incorporation. It must comply with state statutes.  Bylaws must be prepared for the corporation. Bylaws provide internal rules for the operation of a corporation.

11. Key Features in Forming Corporations Slide 3 of 3  Corporations must hold a first or organizational meeting to commence the corporation’s business.