Summary: Let's start from a little disclaimer: corporate formalities can be and in many cases are a rather complex topic. This article attempts to capture the most basic scenarios which are also the most common ones. That being said, we always recommend to consult a corporate/business attorney, licensed to practice law in the state of your corporation's registration, who will be in a best position to offer advice on specific formalities that might be required for corporations registered in that state. Examples of the more complex cases requiring corporate attorney attention are mentioned in the end of this article. Also, this article deals with for-profit corporations only. And now lets proceed to the basics. Corporate Formalities vs. LLC Formalities One of the advantages of the LLC over corporation has to do with LLC structure and company formalities, both being less complex than corporate structure and formalities. As such, many states do not even require LLCs to have Operating Agreements, though it is a good practice to always have one in place. Corporations on the other hand are required to have Bylaws and Minutes of Initial Meetings in almost all states. Basics of Corporate Structure & Corporate Roles Corporation is an entity separate from its owners, and has a three-level structure: it is owned by shareholders, managed by board of directors, and it's day to day operations are run by officers. Below you can see the roles involved, as well as the steps that are typically taken in order to properly establish a standard corporation. The steps don't have to be in that order - there is typically a degree of freedom in terms of what is done first. Incorporator A person or a group or persons who decide to form a corporation (typically future owners of the corporation) appoint someone - a person or an organization - to act as the Incorporator of their new corporation. For example, our in-house incorporators representing our company act as Incorporators on most corporations that our company forms on behalf of our clients. The role of an Incorporator officially ends when the corporation is registered with the state, and the Incorporator issues a Letter of Resignation, naming the initial Directors of the corporation. Board of Directors A board of directors is a body of elected members (Directors) who jointly oversee the activities of a corporation. Board of Directors is elected by the vote of Shareholders (though initial board is appointed by the resigning Incorporator), and part of the responsibilities of the board is to appoint corporate officers and issue shares of stock. Initial Board of directors is listed in the Letter of Resignation of the Incorporator, and this initial board is responsible to adopt the governing document of the corporation - the corporate Bylaws - as well as make first decisions involving initial issue of stock and sale of this stock to shareholders, as well as appointing corporate officers. For that purpose the First Meeting of Board of Directors takes place and its summary is recorded in the document called "Minutes of the First Meeting of Board of Directors". Shareholders Shareholders are owners of the corporation, who typically contribute money or other tangible or intangible value to the corporation in exchange for corporate shares of stock. Shareholders can be individuals or organizations, such as other corporations, LLCs, trusts, etc. To become a shareholder one needs to purchase shares of the corporation either from a new issue of stock (which is authorized by the Board of Directors), or through purchase of existing shares from other shareholders. https://www.myusacorporation.eu/corporation.html
