Articles of Incorporation
In Canada, Articles of Incorporation define a corporation, namely,
- the initial directors of the corporation,
- the classes of shares in the corporation,
- the number of each class of shares in the corporation,
- the rights and privileges of the shareholders of each class of shares,
- the share transfer restrictions,
- and other parameters restricting the corporation's activities.
The Articles may sometimes be referred to the Corporate Charter in some jurisdictions outside Canada and the USA. The Articles are the primary rules governing the structure of a corporation in the United States and Canada, and are filed with a state. Some corporations also are organized with By-Laws, which are the secondary rules governing the management of a corporation.
Once a Province or the Federal government creates a corporation electronically, they issue Certificate of Incorporation. Manually incorporated Ontario corporations do not get a Certificate of Incorporation.
Classes of Shares
Often corporations only have a Common class of shares. Some corporations with a Common class of shares also have a Preferred class of shares.
Sofisticated corporations usually have multiple classes of shares, numbered alphabetically, to solve issues that may occur when there are multiple shareholders in a corporation.