Business owners who anticipate the need for outside investors often choose to form their US company as a C-corporation.
The following checklist describes some of the most important documents used to facilitate a C-corporation’s formation and regulatory compliance.
- Articles of incorporation
The articles of incorporation provide certified information regarding the new entity to the state where the corporation is being formed. In contrast to most of the other documents in this checklist, the contents of the articles of incorporation (sometimes referred to as “certificate of formation” or “certificate of incorporation”) are not confidential and will not remain private.
- Beneficial Ownership Information (BOI) Report
Since the passage of the Corporate Transparency Act, many companies are required to report to the federal government information about who ultimately owns and controls the company. New corporations divulge this information to the federal government by filing BOI reports after incorporation.
- Business plan
The new corporation’s business plan will outline the company’s roadmap to profitability. Rather than simply expressing wishes and hopes, it will include valid commercial assumptions regarding market dynamics and competitive landscapes, as well as the company’s strengths and weaknesses, as well as opportunities and threats in the market. The business plan will also provide details regarding the products and services to be commercialized by the corporation. The business plan will include a financial plan that quantifies the corporations cash flows, fixed expenses, COGS, revenue streams and profitability. While the contents of business plans should remain confidential, they may also be prepared with the intent of sharing them with key stakeholders, including in the following situations:
- As part of an application for an investor visa (E-2 visa or EB-5 visa)
- When seeking new investors
- During discussions with a bank when establishing a line of credit for the corporation.
- Bylaws
The corporation’s bylaws are the internal statutes that the corporation must adhere to. Bylaws are often based on the home state’s laws for corporations but are adapted according to the specific goals and needs of the corporation. Bylaws complement the articles of incorporation and often include provisions regarding the following topics:
- Types (eg, common or preferred) and rights of each class of stock
- Election, duties and obligations of directors
- Meetings of shareholders and directors
- Maintenance of records
- Capitalization table
Cap tables summarize the ownership of a corporation’s various securities (such as common stock and preferred stock) and there provides a good overview of the corporation’s ownership structure.
- Employer Identification Number (EIN)
The EIN is issued by the federal tax authority and serves as the taxpayer ID number for the corporation. It is typically requested when opening bank accounts for the company.
- I-9 Form
Companies must ensure that their employees are authorized to be employed in the US. This requirement is also for any of the shareholders or directors of the corporation who are performing work for the corporation. To this end, US corporations must complete United States Citizenship and Immigration Services (USCIS) Form I-9 for every individual hired by the corporation for employment in the US. The completed I-9 forms are not submitted to USCIS but instead are stored by the corporation.
US immigration law distinguishes between “employment” and “business meetings.”
- For example, an overseas member of the corporation’s board of directors can travel to the US with ESTA or a B-1 visa in order to attend a board meeting. Such an activity in the US generally would not require employment authorization.
- Similarly, a corporation’s founder can travel to the US and prepare the corporation for incorporation and launch without employment authorization. However, if that founder is performing or managing the day-to-day operations of the company, employment authorization is required.
- Licenses and permits
Depending on its business model, a new corporation may have to obtain licenses and permits from the federal, state, county or city where it operates.
- Resolutions from Initial Meeting of Board of Directors
The corporation’s bylaws most likely describe the company’s requirements for meetings of the Board of Directors. During the first meeting, the Board will likely deliberate on (and likely accept) certain agreements that have been created during the incorporation process and will memorialize the outcome of those deliberations in a set of resolutions.
- Restricted stock purchase agreement
A share purchase agreement formalizes the sale of shares of a corporation. In a restricted SPA (RSPA) the shares issued to founders or early investors in the corporation under such an agreement are restricted because ownership is earned over time, through a process referred to as “vesting.”
- Shareholder agreement
Shareholder agreement set forth the rights and obligations of the corporation’s shareholders. Examples of rights and obligations that are commonly explained in shareholders agreements include:
- Transfer of shares, including possible restrictive covenants
- Allocation of voting rights and dividends
- Mechanism for resolution of disputes between shareholders and the corporation
- Stock ledger
Stock ledgers record equity transactions of a corporation, including share issuance and share transfers.
JORDAN COUNSEL helps founders from around the world launch companies in the US. For assistance with the launch of your corporation in the US, including the documents listed above, contact our law firm.
