Incorporation documents (articles of incorporation) are the primary rules governing the management of a corporation, and are filed with a state or other regulatory agency.
In corporate governance, a company's articles of association (called articles of incorporation in some jurisdictions) are a document which, along with the memorandum of association (in cases where the memorandum exists) form the company's constitution, defining the responsibilities of the directors, the kind of business to be undertaken, and the means by which the shareholders exert control over the board of directors.
A company is an incorporated body. So there should be some rules and regulations are to be formed for the management of its internal affairs and conduct of its business as well as the relation between the members and the company. Moreover the rights and duties of its members and the company are to be recorded.
The Articles can cover a medley of topics, not all of which is required in a country's law. Although all terms are not discussed, they may cover:
*) the issuing of shares (also called stock), different voting rights attached to different classes of shares
*) valuation of intellectual rights, say, the valuations of the IPR of one partner and, in a similar way as how we value real estate of another partner
*) the appointments of directors - which shows whether a shareholder dominates or shares equality with all contributors
*) directors meetings - the quorum and percentage of vote
*) management decisions - whether the board manages or a founder
*) transferability of shares - assignment rights of the founders or other members of the company do special voting rights of a Chairman,and his/her mode of election
*) the dividend policy - a percentage of profits to be declared when there is profit or otherwise
*) winding up - the conditions, notice to members confidentiality of know-how and the founders' agreement and penalties for disclosure
*) first right of refusal - purchase rights and counter-bid by a founder.
This page was last modified on 06 May 2014 at 12:39.
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Author: Artis Zelmenis