The Certificate of Incorporation is a document filed with the relevant state authority to create a stock or nonstock corporation. The certificate is also referred to as the corporate charter. A for-profit business venture is generally organized as a stock corporation and issues stock to shareholders. 

A non-profit organization is a nonstock corporation with no equity shareholders. It may have members who vote on matters related to the organization, but those members cannot share in its profits or net assets upon liquidation.

The information required in a Certificate of Incorporation will vary between jurisdictions; however, some common elements exist. For example, a certificate filed with the State of Delaware will require, at a minimum, the following five details:

  • Name of the Corporation. The desired name for the corporation. The corporation name should be available and not already in use. A company can search for existing entity names on the Delaware website, and if the corporation is not ready to file the charter, it can reserve a name for a fee.  
  • Registered Agent Name & Registered Office Address. Every company must have a registered agent physically located within the state. The charter must include the name and physical address of the registered agent. Most registered agent service providers will charge between $50 to $200 per year for the service.  
  • Stated Purpose of the Organization. The corporation lists its principal purpose. Most organizations will state that the corporation may engage in any lawful activity under Delaware law. For example, the stated purpose could be “The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“DGCL”).”  
  • Number of Shares, Class of Stock, and Par Value. A stock corporation must issue at least one class of stock. Most companies will have one class of par value Common Stock with voting rights.
  • Name and Address of Incorporator. The incorporator is the individual filing the certificate. In most cases, the incorporator is a third party (e.g., lawyer, accountant, consultant). After filing the certificate and completing any initial actions by the sole incorporator, the incorporator resigns. 

The corporate charter may include additional provisions depending on the complexity of the corporation’s operations and capital structure. Some additional articles may include:

  • Multiple Classes of Stock. The stock corporation may issue more than one classes of stock. For example, a corporation may issue Preferred Stock and three classes of common stock (Class A Common, Class B Common, Class C Common).
  • Rights Relating to Dividends, Subdivisions, Combinations, and Conversions. The charter may include provisions addressing shareholder rights to dividends, converting shares between classes, and any liquidation rights following a liquidation event. 
  • Voting Rights of Different Classes. Different classes of Common Stock can be assigned different voting rights and privileges. The corporation can assign a class of shares with no voting rights at all, or preferential rights. For example, Class A Common shares may be entitled to one (1) vote per share, while Class B Common shares receive ten (10) votes per share. 
  • Board of Directors. The certificate may include rules governing the board of directors (e.g., general powers, number of directors, election rules, term, removal, vacancy rules, etc.)
  • Limitation on Personal Liability. The certificate may include a provision that expressly limits the personal liability of corporate directors for any breach of fiduciary duty to the corporation or its shareholders.  
  • Indemnity Clause. The certificate may authorize the corporation to indemnify its officers, directors, or other agents.