After you file your articles of incorporation (Articles) you need to put the corporation’s operational structure in place and begin operations. This requires organizational action by the shareholders or, alternatively, the incorporator. Our formation service provides for the latter.
There are two ways to take corporate action. First, have a meeting and take and approve the necessary action. Second, act through written consent.
The organizational consent ratifies the Articles, adopts the bylaws governing the corporation (Bylaws) and, perhaps most importantly, puts into place a record keeping system. This system is of paramount concern for several reasons. First, to facilitate your dealings with banks, government authorities, clients, and potential investors. Second, to provide compliance with statutory guidelines. This is good corporate governance and includes documenting how directors were elected, how officers were appointed, and how the initial stockholders subscribed for and received stock. Subsequently, good governance provides that corporate action should include approval or ratification of your bank, tax and fiscal years, your accountants, substantial contracts, material asset purchases and sales and other significant acts affecting the corporation.
The easiest approach to this is the written consent rather than a formal meeting. Wyoming, in contrast to many states, recognizes the informality of the conduct of business by small, family-held corporations and has adopted a “close corporation supplement” to its corporate legislation which dispenses with most formalities facing a corporation; however, good governance at a minimum dictates the straight-forward approval through consents of major corporate actions. Written consents, particularly in a closely held corporation, can be prepared, executed, and filed quickly and easily without the effort or expense of conducting a formal meeting. Our firm offers this level of compliance to you.
Appointment of Board of Directors; Naming of Officers; and Acceptance of Stock Subscription: The first action of the incorporator is to adopt a consent to serve as an organizational meeting for the corporation. The purpose of this consent is to put into place the corporate structure and commence operations. The incorporator accomplishes this by (i) adopting the Articles; (ii) adopting Bylaws; (iii) establishing the number of directors; (iv) naming the directors; (v) establishing officer positions; (vi) naming officers; and (vii) approving the issuance of stock, either through actual certificates or through a ledger.
Additional Actions: The incorporator subsequently (i) ratifies all actions taken by the incorporator in forming the corporation and approves the expenses incurred; (ii) adopts an accounting and tax year; (iii) authorizes the officers to file all necessary forms for the conduct of business in any state in which the corporation proposes operations; (iv) authorizes the officers to engage an accountant; and, finally, (v) authorizes the officers to open a bank account or accounts.
After accomplishing this, the incorporator resigns. The named directors and officers then assume their respective positions, and the begins its business.
Conclusion: Remember, good corporate governance provides that you keep a clear, written record of the election and appointment of officers and directors and the approval by the Board of Directors of all major corporate transactions.
Your organizational consents starts you off on the right foot.