When you start a corporation, the first thing you need to do is draft the “articles of incorporation” think of this as the outline of your business. Some states call this the “certificate of incorporation.” It is very simple to incorporate. All that is needed is to draft the articles of incorporation and file the document with the secretary of state, along with any necessary filing fees. Most states have a form that can be used to do this. While many things can be included (and possibly should be included) in your articles of incorporation, there are seven distinct requirements.
The name of a corporation seems to be the easiest part of incorporating but can prove to be far more complicated than expected. The name must have language indicating its corporate status. This language is something like inc. co. corp. or ltd. The name must be available. It needs to be distinguishable to the secretary of state when it is on file. Previously, the rule of the thumb was that names couldn’t be “deceptively similar” to other corporations. This rule no longer exists in the law today. If you have a particular name in mind, but you aren’t quite ready to draft your full articles of incorporation, you can reserve your name with the secretary of state. Reservations may differ in duration, but names are typically reserved for about 120 days (60 days in Oklahoma).
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A statement of duration was previously required in the articles of incorporation but is no longer necessary. It is now assumed that a corporation is perpetual. However, if you want to state a set duration for a corporation, your articles of incorporation are the place to do it. Some people choose to put a statement in their articles of incorporation, which states that the corporation is perpetual.
3. Purpose or Purposes
A statement of purpose is not required in every state. However, if you are in a state that follows the Delaware act (Oklahoma, Delaware, and Nevada), you will need to include a statement of purpose. This statement of purpose can be as simple as stating it is to participate in any lawful business practices. You can also choose to exclude certain practices from your business if you want to ensure they do not take place. For example, if you want to make sure your business never sells alcohol you can include a statement of purpose that states the purpose of the business is to engage in any and all lawful business practices, except for selling alcoholic beverages. If you are in any other state (a state that follows the Model Business Commercial Act) you may choose to include a statement of purpose even though it is not required. The default assumption, in these states, is that the business can engage in any lawful business that a corporation can engage in.
4. Information Regarding Authorized Shares
Up until this point, things have been relatively easy, but information regarding shares can get a bit complicated. First, you must determine the number of shares the corporation is authorized to issue. In Delaware act states (Delaware, Oklahoma, and Nevada) you need to state the par value of the shares or state that the shares are “no par” shares. “Par” means the value assigned to each share. One way to look at it is the minimum price for which a corporation can issue its shares. The general recommendation is to do low par or no-par shares. Under the MBCA, you do not have to state the “par” of the shares. Some states have adopted this rule, and others haven’t. So, depending on where you are, you may need to identify the “par” of your shares. If you are in Oklahoma, you must identify the class and series of the stock if there is a specific class/ series of the stock. An example of classes of stock are common and preferred stock. Common stock is a class of stock that is not treated more favorably than other classes of stock by the articles of incorporation. Preferred stock is a type of stock that is treated more favorably than the other class of stock. These preferences can include dividend rights, liquidation rights, and redemption rights. You are not required to have different classes of stock, but if you do, you are required to include this information in the articles of incorporation.
5. Registered Office and Agent
Every corporation must maintain a registered office and a registered agent. You must also include information for your corporation’s agent. An agent is someone who can accept service of process if a lawsuit arises. This is an individual who is allowed to receive legal documents on behalf of the corporation. You must include your agent’s name and street address. The agent can be the corporation as a whole, an individual resident of the state in which the corporation is incorporated in, or a qualified foreign corporation, limited liability company, or limited partnership. Many people choose to make their attorney their agent. Each registered agent must have an office with the same information provided in the articles which are open during regular business hours to accept service of process and otherwise perform the functions of a registered agent. One common misconception is that the registered office address can be a P.O. box; this is not the case. The registered address cannot be a post office address.
6. Initial Board of Directors
Previously, you were required to outline the initial board of directors in your articles of incorporation. The structure of your business will vary, and you may give your board of director’s different titles. This difficulty has been reflected in the current law. You are no longer required to include your initial board of directors in your articles of incorporation under the applicable model laws. However, each state is different, and some may venture from the proposed laws and require that you name your initial board of directors. This can pose an important consideration. This means you need to structure your business before drafting the articles of incorporation and assign individuals to each title.
Finally, the articles must be signed by the incorporator or incorporators. There are no formal requirements that the corporate powers be set out in the articles of incorporation, but it can be helpful for the future. In Oklahoma, at least one incorporator is required for organizing a profit corporation.
In order to find filing forms for the articles of incorporation (certificate of incorporation) for the state of Oklahoma visit: https://www.sos.ok.gov/forms/FM0001.PDF.
In order to file your articles of incorporation in Oklahoma, you only need to prepare your document and file it with the Secretary of State with a filing fee of $50.