A certificate of incorporation is a legal document filed in a particular state in order to form a corporation. It is signed by an officer or incorporator of the corporation and filed with the secretary of state. While companies have some discretion over the structure and contents of their certificate of incorporation, there are common topics covered. Some of the contents are mandated by the business laws of the particular state of incorporation, while other topics are a matter of customary practice. Most U.S. corporations are incorporated in Delaware because of the state’s favorable and well-established business laws.

A typical certificate of incorporation begins with a brief statement of business purpose. This is usually a broad, generic statement such as that the corporation’s purpose is to engage in any lawful business activity. The beginning of a certificate of incorporation also typically contains the address of the company’s registered office.

One major section of the certificate of incorporation will discuss the company’s authorized capital stock. It will set forth the total number of shares of the various classes of stock that the company has authority to issue. A company’s certificate of incorporation will typically provide the maximum amount of common stock and preferred stock that the company is authorized to issue.

The authorized capital stock section will state whether the common stock provides each holder with one vote per share. It will also typically state that the board of directors is authorized to provide for the issuance of one or more series of preferred stock and to designate powers, special rights, qualifications, limitations, or restrictions with respect to such series of preferred stock. It will also clarify that in the event of dissolution or liquidation of the corporation, the holders of preferred stock will have higher priority than the holders of common stock in receiving the assets of the corporation available for distribution.

Another major section of the certificate of incorporation will discuss the board of directors. It will specify the minimum and maximum number of directors that can be appointed to the board. While there is variation in the ranges set by different companies, the minimum number is generally greater than or equal to 3 and the maximum number is generally less than or equal to 18 directors. Sometimes the number of directors is specified in the company’s bylaws, rather than its certificate of incorporation. The certificate of incorporation may also cover how vacancies on the board of directors should be filled. For example, it may require the affirmative vote of a majority of the remaining directors to fill the vacancy.

There is usually a limitation of liability provision that expressly states that none of the company’s directors shall be held personally liable to the corporation or its stockholders for monetary damages with respect to a director’s breach of fiduciary duty. This provision may clarify that this provision does not apply in situations involving intentional misconduct by a director in knowing violation of the law.

The certificate of incorporation typically has a section towards the end with indemnification provisions for directors and officers. The indemnification provisions will typically state that the company will indemnify a director, officer, employee or agent of the company for expenses from threatened, pending or completed legal proceedings. The company may pay the expenses, including legal fees, incurred by such person in order to defend themselves in the legal proceeding. The certificate of incorporation’s indemnification provisions may also specify that the company has the power to purchase directors’ and officers’ insurance, also known as D&O insurance.