Business Entity Regulations

Business Entity Regulations

I currently work for a stock brokerage firm that was organized in Delaware but is recognized as doing business in New York. This means that my company is domestic in Delaware and foreign in New York. One of the major reasons that corporations are setup in the state of Delaware is to take advantage of its low taxes (Mallor et. al, 2004, p. 905).

When a corporation is formed it must follow various codes which are different from state to state. Below is a list of the formation codes that corporations must abide by for the state of Delaware (State of Delaware, 2006, September 7):

§ 101. Incorporators; how corporation formed; purposes.

Describes that any person or group of people, companies, corporations, etc. doing lawful business may incorporate by filing with the Division of Corporations in the Department of State. Corporations for constructing, maintaining and public utilities within this State must also follow Title 26 applicable to such corporations. The address for the state of Delaware is:

The Delaware Department of State

Division of Corporations

P.O. Box 898

Dover, Delaware 19903

Phone: (302) 739-3073

§ 102. Contents of certificate of incorporation.

The name of the corporation must state the full name must contain one of the words “association”, “company, “corporation”, “club”, “foundation”, “fund”, “incorporated”, “institute”, “society”, “union”, “syndicate”, or “union”. The full address of the corporation and the nature of the business, and if they company is issuing shares of stock and how many they would be issuing. The addresses of the incorporators or the directors of the corporation. Any provisions for the management of the business and for the conduct of the affairs of the corporation.

§ 103. Execution, acknowledgment, filing, recording and effective date of original certificate of incorporation and other instruments; exceptions.

The certificate of incorporation, and any other instrument to be filed before the election of the initial board of directors if the initial directors were not named in the certificate of incorporation, shall be signed by the incorporator or incorporators. All other instruments can be signed by an authorized officer, majority of directors, holders of record, or holders of record of outstanding stock.

§ 104. Certificate of incorporation; definition.

Includes the certificate of incorporation on file and all other certificates, agreements of merger or consolidation, plans of reorganization, or other instruments, or any other section of this title, and which have the effect of amending or supplementing in some respect a corporation's original certificate of incorporation.

§ 105. Certificate of incorporation and other certificates; evidence.

A copy of a certificate of incorporation, or a restated certificate of incorporation, or of any other certificate which has been filed in the office of the Secretary of State as required by any provision of this title shall, when duly certified by the Secretary of State, be received in all courts, public offices and official bodies as prima facie evidence of: due execution, acknowledgement and filing of instrument; observance and performance of all acts and conditions necessary to have been observed and performed precedent to the instrument becoming effective; any other facts required or permitted by law to be stated in the instrument.

§ 106. Commencement of corporate existence.

Upon the approval of the Secretary of State for the certificate of incorporation from the date of such filing will constitute a body of corporate by name on the certificate.

§ 107. Powers of incorporators.

If the persons who are to serve as directors until the first annual meeting of stockholders have not been named in the certificate of incorporation, the incorporator or incorporators, until the directors are elected, shall manage the affairs of the corporation and may do whatever is necessary and proper to perfect the organization of the corporation, including the adoption of the original bylaws of the corporation and the election of directors.

§ 108. Organization meeting of incorporators or directors named in certificate