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After You Incorporate, What Next?

Congratulations on your newly incorporated San Diego, California corporation. Filing the incorporation papers with the California Secretary of State is not the end of the process. There are several important steps to take after you have become an “Inc.” Here is a quick list.

San Diego Corporations: Draft Your Corporate Bylaws

To draft corporate bylaws for your new corporation, you will need help from your talented and knowledgeable corporate lawyer. Corporate bylaws are the rules and regulations for your corporate entity establishing voting rules, who can be a director, what corporate officers are desired, the rules for calling shareholder meetings, calling director meetings, how senior employees like the CEO can be hired, etc. Your business is unique and, thus, your bylaws should be custom-drafted.

San Diego Corporations: Hold First Shareholders’ Meeting

The purpose of the initial shareholders’ meeting is twofold:

  • Adopting the corporate bylaws and
  • Electing corporate directors.

You have to have the bylaws in place before the meeting because the bylaws govern how the meeting is called, how it is governed, etc., and the bylaws set out how many directors are to be elected.

So, the first order of business is to vote to approve the bylaws. Unless otherwise stated in your articles of incorporation, with respect to shareholder meetings, the majority vote rules. Thus, as long as 51% or more of the shareholders approve the bylaws, then the bylaws go into force.

After that, the shareholders elect the number of directors that are set forth in the bylaws. Note that sometimes this step is already completed because the initial directors are identified in the articles of incorporation. If so, then the shareholders should vote to RATIFY AND AFFIRM that the listed individuals are the directors of the corporation.

San Diego Corporations: Hold First Meeting of Board of Directors and Appoint Officers

Often with new corporations, the shareholders elect themselves to the Board of Directors. This is normal and common. Thus, after the close of the shareholders meeting, the newly elected directors should hold the initial meeting of the board of directors.

The first meeting of the board of directors has at least two purposes – appointing officers and approving the issuance of official stock certificates. As to the first, whatever title you want to bestow, the law requires at least two officers – chief executive officer (“CEO”) and chief financial officer. Often, the corporation will also appoint a secretary. These are the individuals expected to handle the day-to-day operations of the business. The board is empowered under California law to appoint or terminate these individuals. The CEO or President is empowered to hire and/or fire other employees of the business.

San Diego Corporations: Issuance of Stock Certificates

There are several steps needed with respect to issuing stock certificates, so, again, a dedicated corporate law attorney will be needed. It is important to issue stock certificates properly in California.

San Diego Corporations: Consider Founders’ Agreement and/or Shareholders’ Agreement

While not required, for new California corporations, it is recommended that the owners agree to and sign a founders agreement or a shareholders’ agreement. Aside from various other provisions, the key provisions of a founders/shareholders’ agreement are buy-sell provisions that govern how and when shareholders can sell shares to third parties, what happens if a shareholder dies, gets divorced, etc.

San Diego Corporations: Call San Diego Corporate Law Today

If you need legal advice relating to setting up your San Diego corporation and the steps needed after incorporation, call corporate attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has been named a “Rising Star” for 2015, 2016 and 2017 by Your new corporation will need annual reports and you will have to remember to pay your franchise taxes. Mr. Leonard can help with the annual maintenance requirements and with any other business-related legal matter. Contact Mr. Leonard by email or by calling (858) 483-9200.

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Schedule a Consultation: 858.483.9200