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Corporate Charter Questions

What is a Corporate Charter?

A Corporate Charter is a document that is drawn up when a Corporation is started, that details the state of the new Corporation, and includes the specific purpose, location of business, number and classes of shares if they have any, and duration of the Corporation.

In the state of Illinois, if a club wants to decrease the number of class A memberships available from 150 to 125 from when the club was first organized, and add 25 class B memberships, does this require an amendment to the charter.

In the state of Illinois a person can change the number of memberships if they file the appropriate articles of amendment and change the by-laws to reflect the changes that the person wishes to make. The articles of amendment can be found here.

Is it legal in the state of Florida for the directors to appoint themselves preferred stock in a company?

In the state of Florida the person would have to check in the corporate charter to see what the guidelines are for directors issuing themselves stocks. Although it seems like it may very well be invalid since as officers they are in a financial capacity and are obligated not to engage in self dealing, even when some corporate charters do allow this type of situation. The best way to handle this may be to hire a lawyer and send a letter to the board to either get them removed or to get the stocks voided.

If a company dissolves the business, close out bank accounts, etc. what happens to the money they are still owed?

If the company is a LLC and does not dissolve, then the money that they are still owed can be deposited into the corporate bank account. The owners can keep the corporate charter and quit doing business, so that they can wrap up all outstanding debts or outstanding money that is owed to them. Once the owner surrenders the charter, it may be very hard to accept and cash any checks the company may receive.

What does a corporate charter have to do with a corporation fee for a state?

When a person starts a corporation he/she will have to file a corporate charter or articles of incorporation and in doing this they would have to pay the fees to file. Then the person would have to pay a yearly fee as well as taxes to maintain the corporate charter and keep the company in business.

Is it legal for president of a company to pay all money, or profit, in bonuses instead of paying dividends? Some people own 27% of a small corporation and only get a small amount in a bonus while other people owning 9% of the corporation get more in bonus money than the people who own the larger amount receive.

The company would have to comply with the corporation charter and with the board if there is a board. Although, in most cases, the people who own a larger share of the corporation should typically receive more in bonus money than the people whom own a small amount of shares.

Corporate charters regulate and state how a corporation is run and the rules in which the corporation is regulated. When a person starts a corporation they have to fill out the corporation charter for the corporation to be legal in any state. When a person sets out to do this he/she may need to get the advice or the opinion of an Expert so that he/she knows what they are getting into with the Corporate Charter.
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