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Essential information in a certificate of formation

Residents of Texas who are planning to form a new business should understand exactly which details a certificate of formation should contain. A certificate of formation is the required document that must be filed with the appropriate government state agencies when forming a limited liability corporation. The certificate should contain the name of the corporation that is being formed, along with the type of corporation that the entrepreneurs wish to build.

This certificate also should contain the address of the initial registered office of the corporation, as well as the name and address of all owners, partners or trust managers, depending on the type of corporation being established. If the corporation is formed after a merger or conversion, supporting documents should be provided with all other necessary information. Information on a prior form of organization and jurisdiction of formation of the converting entity also should be provided. If the organization is not a limited partnership, the owners need to provide an estimated period of existence, unless the intent is to have the organization exist permanently.

A certificate of formation for a for-profit organization should mention the number of shares that the organization intends to issue or is authorized to issue. The minimum value of shares also should be mentioned. For organizations that have more than one level of shares, minimum value and number of shares in each class should be stated in the certificate of formation. Information on the number of directors managing the organization, along with their names and addresses, should also be provided.

However, both non-profit and for-profit corporations may include social purposes in their certificates of formation. Generally, social purposes include activities that benefit lower-income people, promote economic opportunities, support the arts and culture or preserve the environment. Considering that the entire process is quite complicated, it may be a good idea to consult an attorney to understand the process and the applicable laws more clearly.

Source: Texas Statutes, "Business Organizations Code," accessed May 7, 2015

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