The Certificate of Incorporation and Bylaws are the two fundamental corporate charter documents of a Delaware corporation. The Certificate of Incorporation must be filed with Delaware’s Secretary of State to be effective. Bylaws, on the other hand, are not filed or shared with state officials. The Certificate of Incorporation of a typical startup will be a standard or “boilerplate” document three to four pages long.
The Certificate of Incorporation (may also be called the “Charter”, or, in California, the “Articles of Incorporation”) must set forth the following under Section 102 of Delaware’s General Corporation Law:
- Name of startup;
- The address of startup’s registered office (must be located in Delaware) and the name of its registered agent (must also be located in Delaware);
- Nature of the business startup proposes to conduct or promote;
- The name(s) and address(es) of startup’s incorporator and/or initial directors; and
- Number of authorized shares of (startup’s) capital stock and the par value of those shares (or, if applicable, a statement declaring that the shares in question are currently without a par value).
Your startup’s Certificate of Incorporation may also address or define rights and provisions such as those listed below:
Limitations of the liability of directors and officers;
- The indemnification of directors, officers, and other agents;
- Authorization for startup’s directors to amend the Bylaws;
- The creation of special voting rights (under what conditions and for whom these may be enacted);
- The conditions under which startup’s stockholders may purchase stock in future equity financing rounds, or the conditions under which the rights, preferences, and privileges granted to outstanding shares of Common Stock may be changed in future equity financing rounds; and
- Imposition of personal liabilities on stockholders (for debts accrued by startup).
Numbers (i) – (iii) of these items tend to be those most common to the Certificate of Incorporation of a startup. Numbers (iv) – (v) become significant when outside capital (Series A financing, Series AA financing, etc.) is raised.