Benefits of a Corporation
Incorporating a business can protect its owners’ personal assets from liability if the corporation is sued or cannot meet its financial obligations. A corporation also helps to protect its owners’ assets if someone files a lawsuit against an employee or business partner. Forming a corporation also lends credibility to a business and can offer other benefits, such as tax savings.
Requirements for Incorporating in North Dakota
Preparing Your Articles of Incorporation
To form a corporation in North Dakota, you must file articles of incorporation with the Secretary of State and pay a fee. Upon filing, the Secretary of State issues a certificate of incorporation. The corporation’s existence begins when the certificate is issued, unless the articles specify a later date. At a minimum, the articles of incorporation must include the following information:
- Name of the corporation
- Address of the corporation’s principal executive office
- Stock structure
- Names and addresses of incorporators
- Registered agent
A corporation can offer different types of stock, called classes or series. These classes can offer different rights to their shareholders, for example some classes of stock may offer voting rights while others do not.
Regarding stock structure, the follow applies:
- The articles of incorporation must state the total number of shares authorized and the par value of each share.
- If there is more than one class or series of shares, the articles must list the classes and series of shares and the par value of the shares in each class or series or state that the board may determine classes and series.
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Naming Your Corporation
Before incorporating a business, it is advisable to find out if the corporate name you want is available. You can do this by searching the Secretary of State’s records online.
You can reserve a name for your corporation for 12 months by submitting an application to the Secretary of State. Name reservations are renewable for additional 12-month periods.
When choosing a name for your corporation, keep in mind the following requirements:
- A corporation’s name must contain the words “corporation,” “incorporated,” “company” or “limited,” or an abbreviation for one of those words.
- A corporation’s name must not be the same as or deceptively similar to another business entity name registered with the Secretary of State, unless the entity using the name consents in writing.
An incorporator signs the articles of incorporation and files them with the Secretary of State. The incorporators’ duties typically end when the articles are filed or a board of directors is chosen.
The following requirements apply when naming incorporators:
- The articles of incorporation must include the incorporators’ names and addresses.
- A corporation must have at least one incorporator.
- An incorporator must be an individual who is at least 18 years old.
- If the articles of incorporation do not name initial directors, the incorporators must elect directors and complete the organization of the company. The incorporators may act as directors until directors are chosen or shares are issued, whichever occurs first.
Corporate directors are responsible for developing a corporation’s business goals and strategies and managing the company’s affairs. Directors usually delegate the day-to-day running of the business to the corporate officers.
Your corporation must meet the following requirements when specifying directors:
- A corporation must have at least one director.
- There is no maximum number of directors, but the number of directors must be specified in either the articles of incorporation or bylaws.
- The articles of incorporation or bylaws may establish other limits on who can serve as a director.
Specifying a Registered Agent
A registered agent receives legal documents for a corporation and then forwards them to the corporation. The registered agent’s address is a physical address where the registered agent is available during normal business hours to receive legal documents.
The following requirements apply when specifying a registered agent for your corporation:
- The articles of incorporation must list the name of a commercial registered agent or the name and street address of a noncommercial registered agent.
- A registered agent may be an individual who resides in North Dakota or a corporation or limited liability company that is registered with the Secretary of State and has a business office in North Dakota. You may also use a commercial registered agent who is registered as a commercial agent with the Secretary of State.
- A corporation cannot serve as its own registered agent.
Stating a Corporate Purpose
You do not have to specify a purpose for your corporation in the articles of incorporation. All North Dakota corporations are formed for a general business purpose, unless the articles provide otherwise.
Determining Incorporation Bylaws
Bylaws are a corporation’s rules for regulating and managing its internal affairs. They are not filed with the Secretary of State. Although bylaws are not required, they provide helpful written guidelines for operating a business.
North Dakota’s statutes provide a list of provisions that may be included in bylaws, including the number and election of directors, the appointment and compensation of officers, classes of shares, the rights and privileges of shareholders and the way reports and financial statements are issued to shareholders.
The only requirement of bylaws is that they must be consistent with the articles of incorporation and cannot violate the law.
Costs of Incorporating in North Dakota
The North Dakota Secretary of State requires a fee when filing articles of incorporation or reserving a corporation name. Corporations are also required to pay state and federal income taxes.