Forming a Corporation – Filing the Articles of Incorporation
A corporation comes into existence when its Articles of Incorporation are filed with the Secretary of State. The Articles of Incorporation do not need to be very detailed and are meant to contain only the most essential features of the corporate structure that are the least likely to change over time.
Corporations in Washington have a structure based on representative management. Shareholders are the owners of a corporation, but they elect a board of directors to make decisions about the corporation on their behalf. The board of directors then designates officers of the corporation, such as a president or chief executive officer, who handle the day-to-day operations of the corporation. The officers serve at the pleasure of the board, and the board serves at the pleasure of the shareholders.
There are two main documents that establish these characteristics of a corporation: (1) the Articles of Incorporation and (2) the Bylaws. The Articles of Incorporation describe the basic features of the corporation that are unlikely to change over time, while the Bylaws are a much more detailed description of a corporation’s internal management. Amending the Articles of Incorporation requires shareholder approval, so only certain key important features of the corporation are included. On the other hand, many provisions in the Bylaws may be amended by the Board of Directors without shareholder approval.
Under Washington law, a corporation is formed when its Articles of Incorporation are filed, but the corporation must have an organizational meeting before it begins conducting business. At the organizational meeting, a board of directors is established, the Bylaws are adopted, and stock is issued. Attorneys often act as incorporators to file the Articles of Incorporation and to name the initial board of directors, and the board then conducts the organizational meeting and issues stock in exchange for contributions.
Unlike many foreign jurisdictions, the formation of a corporation in Washington has very few requirements. Of particular note, there are no requirements regarding the following:
· Residency – The incorporator does not need residence in Washington.
· Money – Capital is not contributed until after incorporation.
· Stock – Stock is not issued until contributions are received.
· Ownership – The incorporator acts as a custodian until the board can convene.
· Franchise Tax – Although corporations formed in certain other states in the United States may be subject to a franchise tax, corporations formed in Washington are not subject to a franchise tax.
The only requirements to form a corporation are for an incorporator to (1) pay a $180 filing fee, and (2) file the Articles of Incorporation with the Secretary of State that includes:
· A valid corporate name, as discussed above;
· The number and types of authorized shares that the board can issue;
· The physical address of a registered office (which must be in Washington, and cannot be a post office box);
· The name of a registered agent at that address (the purpose of a registered agent is to provide third parties, including the government, an individual whom they can contact for various legal reasons, such as service of process and delivery of forms or notices); and
· The name and address of each incorporator.
The state of Washington will also assume several features about the corporation unless the Articles of Incorporation provide otherwise:
· Purpose – The corporation has the purpose of engaging in any lawful business.
· Duration – The corporation has perpetual existence.
· Shares – The board must approve any issuance of shares.
· Right of First Refusal – The shareholders have a pre-emptive right to acquire the corporation’s unissued shares.
· Indemnification – The corporation indemnifies the directors and officers for all conduct within the scope of their duties.
Other provisions that are often included in the Articles of Incorporation:
· Number of directors permitted on the board (often in the Bylaws and not the Articles of Incorporation);
· Initial directors;
· Addresses of the initial directors;
· Rights to amend the Articles of Incorporation and Bylaws;
· Voting rights.
Corporations in Washington have a structure based on representative management. Shareholders are the owners of a corporation, but they elect a board of directors to make decisions about the corporation on their behalf. The board of directors then designates officers of the corporation, such as a president or chief executive officer, who handle the day-to-day operations of the corporation. The officers serve at the pleasure of the board, and the board serves at the pleasure of the shareholders.
There are two main documents that establish these characteristics of a corporation: (1) the Articles of Incorporation and (2) the Bylaws. The Articles of Incorporation describe the basic features of the corporation that are unlikely to change over time, while the Bylaws are a much more detailed description of a corporation’s internal management. Amending the Articles of Incorporation requires shareholder approval, so only certain key important features of the corporation are included. On the other hand, many provisions in the Bylaws may be amended by the Board of Directors without shareholder approval.
Under Washington law, a corporation is formed when its Articles of Incorporation are filed, but the corporation must have an organizational meeting before it begins conducting business. At the organizational meeting, a board of directors is established, the Bylaws are adopted, and stock is issued. Attorneys often act as incorporators to file the Articles of Incorporation and to name the initial board of directors, and the board then conducts the organizational meeting and issues stock in exchange for contributions.
Unlike many foreign jurisdictions, the formation of a corporation in Washington has very few requirements. Of particular note, there are no requirements regarding the following:
· Residency – The incorporator does not need residence in Washington.
· Money – Capital is not contributed until after incorporation.
· Stock – Stock is not issued until contributions are received.
· Ownership – The incorporator acts as a custodian until the board can convene.
· Franchise Tax – Although corporations formed in certain other states in the United States may be subject to a franchise tax, corporations formed in Washington are not subject to a franchise tax.
The only requirements to form a corporation are for an incorporator to (1) pay a $180 filing fee, and (2) file the Articles of Incorporation with the Secretary of State that includes:
· A valid corporate name, as discussed above;
· The number and types of authorized shares that the board can issue;
· The physical address of a registered office (which must be in Washington, and cannot be a post office box);
· The name of a registered agent at that address (the purpose of a registered agent is to provide third parties, including the government, an individual whom they can contact for various legal reasons, such as service of process and delivery of forms or notices); and
· The name and address of each incorporator.
The state of Washington will also assume several features about the corporation unless the Articles of Incorporation provide otherwise:
· Purpose – The corporation has the purpose of engaging in any lawful business.
· Duration – The corporation has perpetual existence.
· Shares – The board must approve any issuance of shares.
· Right of First Refusal – The shareholders have a pre-emptive right to acquire the corporation’s unissued shares.
· Indemnification – The corporation indemnifies the directors and officers for all conduct within the scope of their duties.
Other provisions that are often included in the Articles of Incorporation:
· Number of directors permitted on the board (often in the Bylaws and not the Articles of Incorporation);
· Initial directors;
· Addresses of the initial directors;
· Rights to amend the Articles of Incorporation and Bylaws;
· Voting rights.