How to File California Articles of Incorporation

Your corporate name must not be the same or too similar to other active business names on record with the California Secretary of State. When you contact California for corporate name availability, it is checked only against all other corporate entities in California. Yet ultimately, your articles will not be approved unless your name is distinguishable from all other active registered names including domestic and foreign LLCs and LPs. Also consider conflicts with trademark or service mark registrations or with fictitious business names (filed with the county). Conduct a thorough name availability check before filing your articles of incorporation.

Include a corporate designator:

• General stock corporation corporate names must include the corporate suffix “corporation”, “incorporated”, “incorporation”, “company”, “limited”, or a similar abbreviation.
• California professional corporations may use suffixes “professional corporation”, “prof corp”, “P.C.”, or “PC”. Some California professional boards and agencies do not permit certain professions to be organized as corporations. Also check with the board or agency for their name-style requirements of the corporate name.
• Close corporations must use the suffix “corporation”, “incorporated”, “limited”, or a similar abbreviation.

Restricted words are considered misleading to the public if they do not accurately represent the business, such as “department”, “agency”, “assurance”, and “surety”.

A statement of corporate purpose is required. California permits and encourages a general declaration that the purpose of the corporation is any lawful business. Professional corporations must declare the specific profession in which the corporation is engaged.

You are required to declare your agent for service of process on your California articles of incorporation. The agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. Only one agent may be listed. You may use an individual or an approved corporation.

• Individual: You may declare any resident of California who agrees to serve as your agent for service of process. The individual may or may not be affiliated with the corporation. List the agent’s name and street address (a P.O. Box is not allowed).
• Corporation: You may hire a registered agent service to act as your agent for service of process. This corporation must have filed a certificate pursuant to Section 1505. Your corporation cannot act as its own agent. Only list the name of the corporation, not the street address. Consider a registered agent service especially if you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record

Indicate both the principal street address for the business and, if different, the mailing address. The principal street address may not be a P.O. Box.

The number of shares a corporation is authorized to issue must be stated in its California Articles of Incorporation. Do not write “0”. By default, the corporation is only authorized to issue one class of shares of stock. If you wish for the corporation to be authorized to issue more than one class of shares, or if any class of shares has two or more series, California Corporations Code requires such designations in the articles. You may later change the amount of shares authorized by filing an amendment to the articles. Before actually issuing or selling stock to shareholders (after filing the articles of incorporation), the corporation must comply with the Corporate Securities Law of 1968 administered by the California Department of Corporations.

Close corporations must designate the number of shareholders authorized, which must be between 1 and 35.

Your corporation must have one incorporator and can choose to have more. An incorporator is the individual responsible for executing the articles of incorporation. Each incorporator must provide their name and signature.

Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation.

• If initial directors are named, all initial directors must sign an acknowledgment block along with the articles. Initial directors thereby act as the incorporators.
• Either the number of directors or a range indicating the minimum and maximum number of directors may be declared. If a range is used, the minimum must be 3 or more and the maximum cannot exceed two times the minimum minus one (e.g. not less than three or more than five).
• A provision to indemnify and eliminate director liability should be written as simply “The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law."
• Do not include provisions that contradict the California Corporations Code, for example in regards to removal of directors, authority to alter bylaws, or special powers delegated to certain directors.

The articles cannot include any additional statement of purpose except by way of limitation or except as expressly required by law.

As mentioned previously, if more than one class or more than two series of shares are desired, include additional provisions. Specific provisions may be desired to detail rights in redeeming shares or partial redemption of shares.

If your corporation chooses not to issue fractional shares, the California Corporations Code puts forth three options to handle them. You may wish to detail further how fractional shares will be handled, such as paying in cash the “fair value” rather than the “conversion price” of the shares.

As previously mentioned, professional corporations should check with their governing board or agency for additional requirements on the corporate name as well as other requirements or allowances for provisions in the articles. For example, a professional medical corporation may establish the manner in which directors are selected, removed, as well as their powers, duties, and compensation.

California recently passed benefit corporation legislation. Benefit corporations are a new class of corporation that are required to create a material positive impact on society and the environment and to meet higher standards of accountability and transparency. Recognition as a B-corporation requires additional provisions in the articles of incorporation and recognition is often reinforced by third-party certification, such as by B Lab.

Your corporate name must not be the same or too similar to other active business names on record with the California Secretary of State. When you contact California for corporate name availability, it is checked only against all other corporate entities in California. Yet ultimately, your articles will not be approved unless your name is distinguishable from all other active registered names including domestic and foreign LLCs and LPs. Also consider conflicts with trademark or service mark registrations or with fictitious business names (filed with the county). Conduct a thorough name availability check before filing your articles of incorporation.

A corporate suffix such as "incorporated" is not required (CCC §5122).

Restricted words are considered misleading to the public if they do not accurately represent the business, such as “department”, “agency”, “assurance”, and “surety”. A nonprofit mutual benefit corporation may not use the words “Charitable Foundation” or “Foundation” at the end of the name or immediately preceding the corporate designator.

A statement of corporate purpose is required. California permits and encourages a general declaration that the purpose of the corporation is any lawful business. Public benefit corporations should indicate if the corporation is organized for public purposes, charitable purposes, or both. Public benefit corporations organized for public purposes must provide a specific purpose statement; those organized for charitable purposes should also list a purpose to qualify for California tax exemptions. CID associations should specifically state “This corporation is an association formed to manage a common interest development under the Davis-Stirling Common Interest Development Act.”

You are required to declare your agent for service of process on your California articles of incorporation. The agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. Only one agent may be listed. You may use an individual or an approved corporation.

• Individual: You may declare any resident of California who agrees to serve as your agent for service of process. The individual may or may not be affiliated with the corporation. List the agent’s name and street address (a P.O. Box is not allowed).
• Corporation: You may hire a registered agent service to act as your agent for service of process. This corporation must have filed a certificate pursuant to Section 1505. Your corporation cannot act as its own agent. Only list the name of the corporation, not the street address. Consider a registered agent service especially if you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record

Indicate both the principal street address for the business and, if different, the mailing address. The principal street address may not be a P.O. Box. CID associations should also state the front street and nearest cross street for the physical location of the common interest development, if different than the principal street address.

This section only applies to CID associations. CID associations should list the name and address of the association’s managing agent, if any.

Applying for 501(c)(3), 501(c)(4), and/or California Tax Exemptions requires additional statements in the articles of incorporation.

• Public benefit corporations are those looking to become a 501(c)(3) or 501(c)(4) tax exempt organization, so you will want to include statements required by the IRS for tax exemption. These statements are to the effect of the following:
  • The corporation is not for profit
  • It will not engage in prohibited political or legislative activity listed in 501(c)(3)
  • If dissolved, it will distribute its assets in compliance with 501(c)(3)
  It is wisest to check with the IRS and California Franchise Tax Board for the exact language required for your type of corporation and desired tax exemptions. 501(c) exemption is not automatically recognized but rather an additional application is required for California state franchise and income tax exemption.
• Religious corporations are those looking to become a 501(c)(3) tax exempt organization, so you will want to check with the IRS and California Franchise Tax Board for the exact statements (as just described for a public benefit corporation). In addition, make a statement here as to the specific purpose of the corporation.
• Mutual benefit and CID corporations should include a statement here as to the specific purpose of the corporation. They should also make a statement that the corporation shall not engage in activities or exercise any powers that are not in furtherance of the specific purposes of the corporation.

Your corporation must have one incorporator and can choose to have more. An incorporator is the individual responsible for executing the articles of incorporation. Each incorporator must provide their name and signature.

Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation.

• If initial directors are named, all initial directors must sign an acknowledgment block along with the articles. Initial directors thereby act as the incorporators.
• Either the number of directors or a range indicating the minimum and maximum number of directors may be declared.
• A provision to indemnify and eliminate director liability must match exactly the requirements set forth in the California Corporations Code.
• Do not include provisions that contradict the California Corporations Code, for example in regards to removal of directors, authority to alter bylaws, or special powers delegated to certain directors.

Members elect the board of directors and provide a layer of oversight that is important to many nonprofits, especially larger ones. If desired, declare classes of membership and the rights, preferences, privileges, and restrictions of each.

Every state has different requirements to apply for income, sales, or other tax exemptions. If your nonprofit will have a footprint in more than one state, check with each state for the statements required by these agencies in the articles of incorporation. For example, you may need to include a statement prohibiting the use of surplus funds for private inurement to any person in the event of a sale or dissolution of the entity.