Legal Intelligence
A Basic Understanding of a Corporation
By Blanca Greenstein, Esq., & Nadia Hoosien, Esq. with Greenstein & Associates
Whether you are thinking of forming your own Corporation or have already done so, it is important to understand both the formation and continuous requirements of owning a Corporation. This Article will discuss the basic requirements of formation, as well as the roles and regulations pertaining to the directors and officers of a Corporation.
In order to form a Corporation, one or more incorporators are necessary. Those incorporators then are required to submit the Articles of Incorporation to the Department of State. Once the Department of State has filed those Articles, corporate existence begins. The incorporators are then required to hold an organizational meeting, in which the directors will be elected. Thereafter, either the incorporators or new directors will elect officers of the Corporation, and adopt the by-laws.
Articles of Incorporation: While you can find very helpful information and requirement details at the website of the Florida Department of State, it is noteworthy to highlight some of the mandatory provisions required for the Articles of Incorporation. First, the name of the Corporation must include either “corporation; company” or “incorporated”. It is not sufficient to use “ltd” or “limited” for instance. Second, the name and street address of each incorporator must be provided. Third, the name and address of each registered agent/office must be provided. And fourth, the Articles must state the number of authorized shares the Corporation is permitted to sell. For More Information Click Here.
By-Laws: By-Laws will contain information regarding the internal governance of the Corporation. These By-Laws will provide information about the Officers duties and meeting dates for example. By-Laws are adopted either by the incorporators or directors, and may be amended by either the directors or shareholders, unless that power is expressly reserved in the Articles of Incorporation. Florida Corporation Forms.
Directors: Corporations require at least 1 person to take the role of a director, who has to be at least 18 years of age. Shareholders may elect directors at annual meetings, and may also remove those directors with or without cause, unless the Articles of Incorporation expressly state that directors may only be removed “for cause”. Directors take the role of “management” and “delegators”. Under the management concept, directors set corporate policies, declare dividends, and supervise officers for example. Directors have a duty of care and a duty of loyalty to the Corporation. Under a duty of care, the directors are required to act with the care that an ordinarily prudent person would exercise in a similar position, under the similar circumstances. Under the duty of loyalty, the director must act in good faith, and with a reasonable belief that the director’s actions are in the Corporation’s best interest.
In order to maintain an active corporate status, the Corporation must comply with the Florida Annual Report Requirement, as well as with various Regulatory and Tax Requirements. It is important to comply with these requirements, as failure to do so can risk administrative dissolution. As a Corporation, it is also necessary to obtain an employer identification number, which can be retrieved from the IRS. Remember, forming a Corporation and continuing its status has many benefits that can provide personal asset protection, as well as tax benefits. The Law Offices of Greenstein and Associates has extensive experience and knowledge in the formation of a Corporation and we are happy to discuss the formation of a Corporation in greater detail with you.
Disclaimer: This column is not intended to provide legal information or advice. All data and information provided on this column is for informational purposes only as well as to give general information and a general understanding of the law, and not to provide specific legal advice. By reading this column you understand that there is no attorney client relationship between you and the publisher. This column should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.