What are Articles of Incorporation?

Articles of Incorporation describe what a corporation can and cannot do. They typically include:

1. The corporation’s chosen name
2. A description of the type and classes of shares that can be issued
3. The number of directors the corporation may have
4. Whether there are restrictions on share transfers
5. Whether the corporation is restricted from certain business activities
6. Other rules and provisions

Common Mistakes

The most frequent mistakes we see made by non-lawyers when filing Articles of Incorporation are:

1. Failing to include proper restrictions on share transfers required for the corporation to maintain its status as a “private issuer” for securities legislation
2. Putting unnecessary restrictions on the business of the corporation
3. Failing to properly review the proposed name, resulting in costly rebranding and potential lawsuits
4. Failing to include a flexible share structure that allows for different classes of shares and future changes

These issues are typically not identified until years later. Where they can be fixed, it’s often quite expensive. The best way to prevent these issues is to set up your business with a qualified legal professional.