A corporation helps safeguard your personal assets, as the owners of a corporation — the shareholders — are generally not liable for the corporation’s debts and obligations. A corporation may also help protect the owners if an employee is accused of wrongdoing.
Requirements for Incorporating in Alabama
Preparing Your Alabama Articles of Incorporation
A corporation’s existence begins when the articles of incorporation are filed, unless the articles specify a later date. To incorporate in Alabama, you must file the articles of incorporation, also known in Alabama as the Domestic Business Corporation Certificate of Formation, and a Certificate of Name Reservation in the office of the probate judge in the county where your corporation’s business offices are located. When filing, you must also include the appropriate fees. Check with the probate judge’s office for the most recent fees, and be prepared to pay a fee to both the state and the probate judge’s office.
The articles of incorporation may contain many provisions, but at a minimum they must include the following:
- Name of the corporation
- Street address of the corporation’s principal office
- Purpose of the corporation
- Registered agent name and registered office
- Incorporators’ names and street addresses
- Directors’ names and street addresses
- Duration of the corporation, if it is not perpetual
Stock structure, including the classes of shares and the total number of shares authorized for each class. If there is more than one class of shares, the articles must provide a distinguishing description for each class and state the relative rights, limitations and preferences for that class.
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Naming Your Alabama Corporation
Before filing your articles of incorporation, you should make sure the corporate name you have chosen is available, which can be done by searching the Secretary of State’s records online.
You must obtain a Certificate of Name Reservation from the Secretary of State before you file your articles of incorporation. You can do this through the Secretary of State’s website. Your corporation’s name must meet the following criteria:
It must include the words “incorporated” or “corporation,” or their corresponding abbreviations.
It cannot be the same as or deceptively similar to the name of another corporation registered or reserved with the Secretary of State.
Incorporators sign the articles of incorporation and deliver them to the probate judge for filing. Their names and addresses must be listed in the articles of incorporation. Also note that:
- Your corporation can have one or more incorporators.
- An incorporator must be a person.
- An incorporator’s responsibilities end when the articles of incorporation are filed. This means someone besides the owners could incorporate the corporation.
A corporation’s directors determine corporate strategies and policies and oversee the corporation’s management. Directors owe a fiduciary duty to the corporation, which means they must always place the interests of the corporation and its shareholders above their own personal interests. The following are requirements for specifying directors for your Alabama corporation:
There must be at least one director. Alabama law does not set a maximum number of directors but does require that the number of directors should be specified in the articles of incorporation or bylaws.
A director must be at least 19 years old but does not have to be a shareholder or an Alabama resident. The bylaws or articles of incorporation can impose other restrictions on who may serve as a director.
Specifying a Registered Agent in Alabama
Legal documents and other official correspondence addressed to the corporation are delivered to the corporation’s registered agent. A registered office is the registered agent’s business address. The following guidelines apply when specifying a registered agent:
A registered agent may be a person or a corporation. The registered agent’s business office address must be the same as the address of the registered office.
A registered office may be the same as any of the corporation’s places of business.
Stating a Corporate Purpose
Alabama permits corporations to state their corporate purpose in general terms, providing flexibility if your corporation’s purpose changes over time. The general purpose may be stated as “the transaction of any or all lawful business for which corporations may be incorporated in Alabama under Title 10A, Chapter 2 of the Code of Alabama.”
Determining Incorporation Bylaws
A corporation’s bylaws describe the way the corporation will operate. Bylaws are not filed with the state and are not required for incorporation, but the directors must meet and approve bylaws after the articles of incorporation are filed, unless the articles give the shareholders the right to approve the bylaws.
Bylaws may include any provision for managing the business and regulating the affairs of the corporation. Typically, they address such matters as the number of officers, directors and committees; their responsibilities; and the manner in which directors’ and shareholders’ meetings are conducted.
Bylaws cannot include anything that is inconsistent with the law or the articles of incorporation.
Costs of Incorporating in Alabama
In addition to the filing fee required by the Secretary of State, you must also pay a filing fee to the county probate judge. Reserving a name also comes with a fee. Corporations are required to pay state and federal income taxes.
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