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3. COMPANY FORMATION

d. Government Filings

Articles

The next step is to file the paperwork to create the company in its place of domicile. This usually involves filing “articles”. In Delaware, the articles are called "certificates".

The articles comprise the primary governing document of a company. The articles contain basic information about the company, such as its name, purpose, officers, directors, and agent for service of process. The document may also address additional matters such as transfer limitations, dissolution events, agent authority, indemnification rights, liability limitations, and the preferential rights of investors to distributions.

You may amend the articles at any time, except as limited by applicable law, agreements, and the articles themselves. Amended articles must be filed with the state.

Registration

If you organize your company in a “foreign” jurisdiction such as Delaware, you will then need to register the company in California. You may also need to register your company in other jurisdictions where it transacts intrastate (as opposed to "interstate") business.

Failure to register may result in government fines and the suspension of business privileges. For example, a company may be prohibited from filing a lawsuit in state court.

Additional Documents

California and Delaware do not require the filing of bylaws, shareholders' agreements, LLC operating agreements, or limited partnership agreements. However, you may wish to file such documents in order to put third parties on notice of limitations contained in them. In addition, states other than California and Delaware may require such filings.

States typically require the filing of periodic reports. For example, California requires corporations and LLC's to file a “Statement of Information” within 90 days after filing the articles. After the first year, companies must file a Statement of Information on an annual basis if a corporation, or bi-annually (every two years) if an LLC. Delaware does not require corporations or LLC's to file a periodic report.

If your company issues securities to investors, you may need to file additional documents with state and federal agencies in connection with the securities offerings.

Licenses and Permits

Your company must obtain licenses and permits as required by law. For example, a motion picture production company in Los Angeles might need the following:

• city business license
• construction permit
• burglar alarm permit
• fire alarm permit
• land use permit
• zoning approval
• motion picture permit

In addition, the individual officers and employees of your company may need occupational or professional licenses.

All licenses and permits require the filing of applications with government agencies. Usually, a company must wait for the licenses and permits before doing business. Thus, you should apply as early as practicable.

Fictitious Name

Some companies do business under fictitious names (DBA's) that differ from the names in their articles. ("DBA" stands for “doing business as”.)

State and local agencies may impose filing and publishing requirements on companies using fictitious names. For example, companies in California must comply with the following:

• file the DBA with the county clerk in the county of the principal place of business
• maybe file the DBA in other counties where the company does business
• publish the DBA once a week for four consecutive weeks in an approved newspaper
• file an affidavit of publication with the county clerk(s) within 30 days

These requirements do not apply to companies doing business under the names contained in their articles.