VIEWS: 2 PAGES: 1 POSTED ON: 7/8/2011
Most states have standard documentation that must be filled out in order to form a legal entity. These forms have been condensed to ensure that lawyers cannot submit lengthy incorporation documents filled with unnecessary information. The information that is most important on these incorporation documents is the name of the business entity, the name of the owner or registered agent, the names of the officers and/or directors, as wells as a clear purpose as to why the corporation should exist.Corporate lawyers who specialize in wording that will be most beneficial to the corporation normally write the purpose section of the incorporation documents. General language is most often used in today's documentation, however it was more common years ago to draft a purpose with specific information that could be understood by the courts.Nowadays, when a corporation is formed, the purpose can be something like, "to perform business for any lawful purpose." In the years prior, though, the purpose would be specific to a certain area of business. For example, if it were a business that served ice cream, the purpose would be to serve ice cream and nothing else. The corporation would not legally be able to branch out into other businesses, so the same corporation wouldn't be able to open a retail shop. The law eventually changed because companies - such as the ice cream company - wouldn't be allowed by law to serve hot dogs and hamburgers, even though it made perfect sense to sell all types of food at the establishment. If the company decided to sell items other than ice cream and somebody complained, there would be a legal battle in the courts. Eventually, the courts decided that it would be wrong to limit a corporation's future endeavors by following the initial purpose laid out in the articles of incorporation to the T.These limitations made sense back many years ago, but in today's society, corporations need to be able to engage in many types of different business activities and invest in new opportunities. The modern way of completing the standardized articles of incorporation allows corporations to diversify and invest in any business allowed by law. If the old way of limiting a corporations purpose were still in effect, there would be many more lawsuits every time a corporation did not follow the specifics of the purpose section in the articles of incorporation.In order to craft a well-worded purpose, a corporate lawyer experienced in business law should draft the section. This will ensure that a newly formed corporation will be able to invest in new ventures and opportunities as they arise. Furthermore, a well-written purpose will keep you out of court and allow you to pursue contracts without fear of violating your articles of incorporation.
Pages to are hidden for
"Legal Issues Regarding Articles of Incorporation"Please download to view full document