Indemnification and Advance Payment

Reimbursed at the End

Indemnification obligations do not arise until there is some determinable amount that a party is obligated to indemnify. The fact that a party has an indemnification right does not mean they will get reimbursed for their expenses or losses (especially defense costs and attorney fees) until after there is an actual out-of-pocket expense that is found to be covered by the contract language. In other words, you do not get reimbursed until the end.

Example in Corporate Setting

An […]

Read More

Top Seven “Optional” Provisions to Include In Your Articles of Incorporation: Number 7

The Articles should state basic information about the establishment and maintenance of the Board of Directors. Essential elements include how many directors there are to be, whether the number is determined by the Board, and whether there are minimums or maximums to the number. The shareholders can use the Articles as an opportunity to specify any special limitations, expectations, or guidelines under which the board is to operate such as focusing on certain public goods, social responsibility, industries, values, goals […]

Read More

Top Seven “Optional” Provisions to Include In Your Articles of Incorporation: Number 5

The Articles should specify the necessary number of shares for a quorum of shareholders, as well as the required vote for making various decisions. Generally, quorum will be a majority of the shareholder’s entitled to vote, and a decision will be made by a majority. While a quorum cannot be less than one-third of the shares entitled to vote, quorum and voting requirements can be increased by the Articles, or the Articles can give the Board of Directors the power […]

Read More

Top Seven “Optional” Provisions to Include In Your Articles of Incorporation: Number 3

To the extent there are to be different types of stock (as in a C-Corporation), or there is to be nonvoting stock, the Articles need to specify the amount and type of stock, the rights of the stock, and the authority of the Board to issue the stock. This is a very complicated issue with many potential tax issues to be considered. Be sure to consult with an attorney and accountant as you look at variations on stock classes.

Read More

Top Seven “Optional” Provisions to Include In Your Articles of Incorporation: Number 2

The Articles should address cumulative voting. Cumulative voting is when the number of votes a shareholder has is multiplied by the number of candidates to be elected to an office, such as a director, and the shareholders are allowed to use up their votes over the course of the voting using any number of their votes for each candidate until their votes are gone. In short, the process allows a minority shareholder the ability to accumulate their total number of […]

Read More

Top Seven “Optional” Provisions to Include In Your Articles of Incorporation: Number One

The Articles should include a statement of the purpose of the corporation. This statement does not have to be extremely specific, but it should not be extremely broad either. Often, people state that their business is organized with the purpose of conducting any and all lawful business. However, this can too easily create a serious conflict that can end up being fodder in a dispute between shareholders, shareholders and the board of directors, and with officers of the company.

In […]

Read More

When there is No Choice Made in the Articles of Incorporation, the Default Statutory Provisions Govern

A corporation has a great deal of flexibility in its governing and organizational documents. If the corporation fails to state its choices, it will be subject to the default statutory rules and requirements. Even though the defaults will sometimes be acceptable, many times they are not, or include requirements the corporation does not even know about, understand, or execute.

When dealing with the default statutory provisions, there are a lot to go through and consider. The Colorado Business Corporations Act […]

Read More

Optional Provisions for the Articles of Incorporation Under Colorado Law

The list of required provisions in the Articles of Incorporation is an extremely limited list as compared to the provisions that often should be, or could be, in the Articles.

Few laypersons recognize that while there are required provisions, the same statute in CRS § 7-101-102(2) identifies other provisions that “may” be in the Articles of Incorporation. For example, a couple of those categories of discretionary provisions include provisions “[d]efining, limiting, and regulating the powers of the corporation, its board […]

Read More

Filing Articles of Incorporation and the Simplicity of the Colorado Secretary of State’s Website

In practice, many people are somewhat superficial in creating their corporations. They visit the Colorado Secretary of State’s website and file their Articles using the online form prepared by the Secretary of State with a lot of assumptions, presumptions, and simplicity. While the simplicity of the Colorado Secretary of State’s system and processes, including its website, fees, and forms, sets Colorado apart as particularly efficient, useful, and constituent friendly, it is also deceptively simplistic for the layperson.

The Colorado […]

Read More

Starting a Corporation by Filing Articles of Incorporation

Corporations are generally private arrangements authorized by the State. They are governed by a combination of statutory and common law. In short, the Corporation enjoys a certain legal status, including certain rights and privileges, and in exchange the corporation submits to a legal framework governing aspects of the internal and external activities of the corporation.

To take advantage of this framework, the person or people representing the corporation (incorporators) have to specifically take advantage of the legal framework. This is […]

Read More