What are Articles of Incorporation?
The Articles of Incorporation are a legal document filed with a provincial or territorial government, or the federal government, which sets out a corporation’s purpose and regulations. This is one of the documents necessary to the incorporation process
What Information is Included in Articles of Incorporation?
1. The full legal name of the corporation (from the name search report).
2. The full address of the registered office of the corporation (cannot be a PO box).
3.The number of directors (can be fixed or a minimum and a maximum).
4. The full names and addresses of each of the founding directors. (For a federal or Ontario provincial incorporation at least 25% of the directors must be resident Canadians, or if less than four directors at least one must be a resident Canadian.)
5. Restrictions on the business activities of the corporation or powers that the corporation may exercise. For example, “The business of the corporation shall be limited to the sales and service of motor vehicles”.
6. The classes of shares and the maximum number of each class of share that can be issued. Shares are typically given descriptions such as Common, Class A, Class B, Preferred, or other such designations.
7. The rights, privileges, and restrictions of each class of shares. For example, a class of shares may be described as “Non-Voting“, meaning that owners of the shares cannot participate in activities such as the election of directors. Shares may also have a designated fraction of voting rights, for example,1/10th of a vote per share. Preferred shareholders normally enjoy a preferential right to dividends and return on capital in the case of dissolution of the corporation (greater than holders of common shares but less than bondholders).
8. Restrictions (if any) on the issue, transfer, or ownership of shares.
9. Provisions or restrictions on the borrowing powers of the directors. For example, “The Board of Directors is authorized to borrow money or mortgage property as security for any debt or liability of the Company”.
10. Additional articles as required, such as proxy voting requirements, majority voting rules, etc.
11. Full names and signatures of the incorporators.
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