Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Corporate Charter

What it is:

Also called articles of incorporation, a corporate charter is a legal document that sets forth a corporation's basic information, such as its location, profit/nonprofit status, board composition and ownership structure. A corporate charter is not the same as bylaws, which set forth the rules for the company's day-to-day operations.

How it works (Example):

Specifically, corporate charters typically include the following, though detailed requirements vary by state:

  • The corporation's name and address
  • The corporation's purpose
  • Whether the corporation is nonprofit or for-profit entity
  • The name and address of the corporation's registered agent
  • The number of shares authorized
  • The classes and par values of these authorized shares
  • The directors of the new corporation

The corporate charter must be filed with the secretary of state for the state in which the corporation is headquartered. In most cases, there is fee to do this.

Although many state government websites offer basic templates for corporate charters, many people consult business attorneys when filing their corporate charters because some states offer more favorable business environments in which to incorporate.

Why it Matters:

Corporate charters give birth to a new corporation. They establish the corporation's existence. Once they are filed and approved by the secretary of state, a corporate charter represents the legal creation of the corporation.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...