General Background on Incorporations -Basic Information

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These forms are designed to conform with the corporation laws of the state of incorporation. These forms are not designed to be used for a corporation conducting licensed professional activities, e.g., medical, dental, law, accounting, architecture, etc. Obviously, the corporation may only conduct those activities not prohibited by applicable state law. Generally, the forms are suitable for a small or mid-size corporation.

The establishment of a corporation requires the filing of a document variously called Articles of Incorporation (Certificate of Incorporation or Charter) (hereinafter the “Articles”) with the appropriate state authority usually called the Secretary of State. Bylaws (or Regulations) (herein after the “Bylaws”) govern the internal management processes of a corporation. A measure of flexibility is allowed under applicable state statutes, but the terms of Bylaws should not conflict with either the governing state statutes or the Articles. The Minutes of the Organizational Meeting of Directors (or in the alternative the Consent to Organizational Actions of Directors) is the key document required to complete the organization of a corporation.

All terms of governance, except matters acceptably covered by so-called default provisions of the applicable state corporation laws, should be reflected in the Bylaws adopted by the Board of Directors on behalf of the corporation. Matters not addressed in the Articles or Bylaws will be governed by the default provisions in applicable state statutes governing corporations. Some provisions under state law are mandatory and cannot be overridden by the Articles or Bylaws. 1

meetings of shareholders and maintenance of records. Other methods of amendment may be available under applicable state law. Day to day matters are handled by officers who are elected by the Board of Directors. Annual meetings of directors and shareholders (or in the alternative. Cash distributions that threaten solvency of the corporation are limited by state law in various ways. In matters of governance under the form of Bylaws. the overall management of the corporation is by the Board of Directors elected at the annual meeting of the shareholders. annual Consents to Actions) are required. In addition. The standard of care of directors and officers is not addressed in the form. meetings of directors. 2 . election of directors. the mandatory state statutory law provision will supersede any offending provisions in the form of Bylaws.Efforts have been made to avoid provisions in the form of Bylaws which conflict with mandatory provisions of the applicable corporation laws. Events of dissolution are governed by mandatory provisions of state statutes and are not addressed in the Bylaws. If such a conflict exists. but such conflicts may yet exist. users are advised to consult with legal counsel. Amendment of the Bylaws is addressed in the form in a specific way. the Bylaws address among other matters. Transfers of shares are restricted under an optional provision of the Bylaws. Indemnification of officers and directors is addressed generally. Under the form of Bylaws. election of officers.

The forms are not a substitute for a detailed review of applicable state statutes and legal advice. or to replace the need for. professional legal advice concerning the establishment and operation of a limited liability company. election of officers. Persons who are not professionally conversant with corporation law or taxation must seek professional legal and tax advice prior to the use of the forms for his or her particular requirements.A number of significant resolutions (or consents to actions) are provided in the form of Minutes of Organizational Meeting of Directors (and. are strongly advised to review the applicable statutes for recent changes. These forms without changes may not be suitable for all circumstances. 3 . or the need for professional tax advice. and bank accounts and important tax matters including election of S Corporation status and adoption of a medical expense reimbursement plan. Please be advised that laws governing corporations are subject to change from time to time. A user of the forms should consult with his or her tax advisor concerning election of S Corporation status and adoption of a medical expense reimbursement plan. their professional advisors. Users or. Persons outside of the legal profession must seek professional legal and tax advice prior to the use or adaption of the forms for his or her particular requirements. issuing of shares. The forms were prepared with attention given to the basic requirements of the laws of the state of incorporation. in the alternative. Consent to Actions) dealing with adoption of Bylaws. designation of registered agent. as appropriate. The above descriptive material and the forms are not intended to be.

INC. 4 . ALL RIGHTS RESERVED.*** ©2005-2007 ATTORNEYS CORPORATION SERVICE.

wpd General Background on California Corporation -Basic Information- 5 .FOOTER PAGE June 2. 2007 C:\ACS\CorpDocuPAK-CA DB\PDFSource\Corporate Multi General Background.

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