Corporations must maintain detailed business records to operate in a compliant manner.
One such record is the incorporator’s statement (also called the statement of incorporator in some states). Although the statement is usually relatively short, it plays an important part at the beginning of your business.
Why is the incorporator’s statement so vital? What else does the role of the incorporator include? This brief guide will help familiarize you with the essentials of the incorporator’s statement.
What Is an Incorporator’s Statement?
Most business professionals are familiar with the concept of meeting minutes, which are basically just comprehensive notes from the meetings of the board of directors. Usually, the incorporator’s statement is the first item in the corporation’s minutes, and the statement is usually issued during the first meeting.
The incorporator’s statement is signed by all of the initial incorporators of the business, and the document details all actions taken at this important meeting. In addition, the incorporator’s statement functions as a means of officially designating the company’s initial directors as being in control of the corporation.
To put it simply, the incorporator’s statement is a written document that sets up the traditional “board of directors” structure within the corporation.
Why Is the Incorporator Important?
The incorporator’s statement is important because it sets out in writing the governance of the corporation. The written document makes everything official and establishes a permanent record. In this statement, the incorporator outlines who will sit on the board of directors, and also resigns their power as the company’s incorporator.
As for the role of the incorporator itself, the importance of this role stems from the fact that the corporation does not yet exist, but still needs someone who can speak on its behalf. Obviously, because the corporation isn’t an entity yet, there are no officers or directors to take on this responsibility.
Therefore, it is vitally important that someone has the authority to sign off on official documents for the business, and also make certain that the corporation is set up in a way that allows it to conduct business in a compliant manner as soon as it is officially formed.
What Does the Incorporator’s Statement Include?
The incorporator’s statement is relatively short, but it does contain several important components. First, the letter includes the written resignation of the initial incorporator(s).
The initial incorporators are the individuals who filed the articles of incorporation, and every incorporator must sign off on the statement.
Following the statement of resignation, the incorporators should list the names of all the initial directors to be appointed for the board. Somewhere on the statement, there needs to be a printed date of when the appointment took place. For most companies, this process will complete the incorporator’s statement.
How it Works
The statement of incorporator accomplishes two things. First, the incorporators effectively remove themselves as the primary leaders of the corporation, and then the statement appoints the initial board of directors.
If desired, the incorporators can both “resign” and appoint themselves as initial directors. In this sense, the statement would be more of a formality than an actual change in leadership.
Often, the incorporators have already chosen the initial directors well before the first meeting, as the articles of incorporation requests the names of these initial directors. The incorporator’s statement serves as the official appointment within the corporation’s own records.
The number of initial directors must meet your state’s minimum requirements. States usually require you to have one to three initial directors — you can appoint more, but you must at least meet the minimum requirements.
Once you issue the statement, you should add it to your meeting minutes, and ensure that it remains as a part of your corporate record.
What Else Happens at the First Meeting?
There are a few other important developments that should take place at your first board of directors meeting. You’ll want to approve the corporation’s initial documentation, and make sure your officers are designated and confirmed.
Furthermore, you might want to determine officer salaries and benefits at this meeting, because the incorporator’s resignation puts the officers into their roles immediately. It’s always important to keep accurate and thorough meeting minutes at any meeting of your corporation, but that’s especially important at your initial meeting.
With this in mind, it might be a good idea to follow a meeting minutes template for this occasion.
Who Can Be Your Corporation’s Incorporator?
There aren’t any stringent rules or regulations dictating who is allowed to serve as the incorporator of an American business.
The important aspect of this position is simply that the person or people entrusted with this role are granted the authority to make important decisions on behalf of the corporation, before control of the business is passed to the directors.
Often, a corporation will designate a member of the company to function as the incorporator — this can be a director, an officer, or a shareholder. In other circumstances, hiring a lawyer to serve as the incorporator can be a popular option, especially if the corporation is large or complicated in nature, or if no one associated with the business has any experience serving as an incorporator.
Just because there aren’t any regulations on the federal level regarding who can be the incorporator doesn’t mean there aren’t state-level rules dictating who can serve in this role. Specifically, there are some states that require an incorporator to be a legal adult who is at least 18 years of age.
Other than this, there aren’t any common requirements that we’re aware of.
There’s nothing particularly complicated about the incorporator’s statement, but it’s a vitally important document for any new corporation. Without the incorporator’s statement, the directors cannot officially take over leadership of the company.
It doesn’t really matter who you designate as the incorporator(s) of your corporation — all that does matter in this sense is that the incorporator forms your corporation correctly, and completes the incorporator’s statement effectively and efficiently.