Board Approval of Organizational Matters

When your startup is formed as a Delaware corporation, it must hold an organizational meeting (required under Section 108 of Delaware’s General Corporation Law). This organizational meeting may be conducted by written consent under Section 108(c). In other words, if the members of your startup’s board of directors sign a “written consent” form approving the actions that they would have voted on in a face-to-face meeting, the face-to-face meeting is not required. It should come as no surprise that most startups choose to conduct their organizational meetings by written consent.

The primary purpose of an organizational meeting of your startup’s board of directors is to formally adopt the Bylaws. The meeting may also be used to:

  • Ratify acts taken by incorporator (includes incorporator’s filing of the Certificate of Incorporation);
  • Establish the size of startup’s board of directors, ratify the election of any directors already appointed by the incorporator, and elect additional directors if appropriate;
  • Appoint startup’s initial officers;
  • Establish time and location of annual meeting of startup’s stockholders;
  • Authorize startup to maintain a minute book;
  • Establish startup’s corporate seal (even if seal will not be used);
  • Approve and/or adopt the form of stock certificates, if any;
  • Authorize officers to enter into contracts, open bank accounts, and hire auditors on behalf of startup;
  • Authorize officers to file documents seeking a federal tax ID number and/or employee identification number (EIN);
  • Approve stock issuances to startup’s founders;
  • Approve equity-incentives plan and related agreements (if those have been adopted);
  • Approve form to be used for indemnification agreements with startup’s directors and officers;
  • Establish startup’s fiscal year;
  • Establish the location of startup’s principal business office;
  • Authorize officers to obtain business licenses in states where startup will operate (if those are required);
  • Authorize procurement of insurance including: (a) workers’ compensation; (b) comprehensive general liability; and (c) fire and casualty;
  • Approve taxing of startup as a subchapter S corporation (if appropriate – should be noted that most startups elect not to make subchapter S elections).

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Formation Documents for Delaware Corporation

Package Includes

  • Action by Incorporator
  • Board Approval of Organizational Matters
  • Bylaws
  • Certificate of Incorporation
  • Common Stock Certificate Exhibit (to Board Approval of Organizational Matters)
  • Consultant Proprietary Information and Inventions Agreement Exhibit
  • Employee Proprietary Information and Inventions Agreement Exhibit

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