The articles of incorporation are an essential document for any corporation. It must be filed in the state where you wish to do business; this is what incorporates the corporation. Each state has a different fee for filing, and in the state of Delaware the cost begins at $89.
Although each state has different requirements for what needs to be included, typically the name of the corporation as well as what the business plans to do will be included. You should also include the registered agent, information about the business’s stock, and the legal address of the company. Once incorporated, the business is separate from its owners. This means that the company’s directors, officers, and owners are not liable for the business debts of the company.
The articles of incorporation are important because they report information about the corporation to the state’s governing bodies.
Reasons to Amend Articles of incorporation
If any amount of the information within a corporation changes, then it will be essential to amend the articles of incorporation. For example, if there is a change of address, purpose, company name, or type of corporation. If this occurs, the articles of incorporation will need to reflect those changes. Another reason to amend the articles of incorporations would be changes to the number of stocks that exist, or how they are valued.
One of the most common reasons to amend the articles of incorporation is due to changing officers or directors. This means that every time an individual leaves the business, or a new role is filled, the articles must be amended.
What Happens if You Don’t Change your Articles of Incorporation?
Although it may seem like a burden to amend the articles of incorporation, failure to do so can be a violation of the law. When you change the contact names or addresses of the corporation within the articles, it provides the Secretary of State with the right information of someone to contact. This may be due to legal matters, tax issues, or other essential information.
How to Change Articles of Incorporation
The actual modification of the articles is not something that should be difficult, but, sometimes, getting everyone within the organization to agree on a change is the most difficult part. The first step in modification is to create a proposal. This should outline what you wish to change.
After the proposal is made, there is a requirement for board approval. This means that the board must agree to pass this on to the shareholders to vote. In some states, unanimous agreement from all the shareholders is required to make a change. In Delaware, it is only required that a majority of shareholders agree to change the articles of incorporation.
If the majority agrees that the articles should be amended, the next step is to file with the state. This is done by filing a certificate with the Delaware Division of Corporations. This step may also be skipped, and a new amended version can be submitted, but you will need to pay another filing fee. If you file a certificate of amendment, it can help prove that it has already been approved by shareholders.
When you file the amended certificate with the Delaware Division of Corporations the filing fee is $89, plus $9 for each additional page. If you are looking to increase the number of authorized shares of stock there may be additional fees.
The final step is the Secretary of State approval. Included with your certificate can include a cover letter that provides both the company representative's name and contact information. Once the certificate is accepted, you can amend it further using the restated certificate.
Why You Should Contact a Business Attorney Before Amending Articles
Working with a lawyer guarantees that you are staying compliant. There is a lot that goes into amending the articles of incorporation of your business. There are also various benefits of working with a lawyer. For example, a lawyer can help you form your documents, but they can also help you to keep up with any changes that emerge legally. The law is always changing. And not being in compliance is a serious issue. Ensure the future of your corporation and utilize the help of a lawyer to amend the articles of incorporation of your business.