Florida Business Corporation Act
The Florida Business Corporation Act sets the rules for corporations formed in the state of Florida.3 min read
The Florida Business Corporation Act sets the rules for corporations formed in the state of Florida. Many decisions need to be made by the owner of a business when running a company. They need to choose an appropriate business name and decide which type of business entity is the best. These are important decisions, as they'll affect the overall success of the business. It's essential to be informed when taking this step, as there are advantages and disadvantages of forming a corporation in Florida.
Incorporating a Business Under Florida Corporate Laws
When a business determines that it's the right move to incorporate, they'll need to then learn the proper steps for incorporating their business. There are many steps to take according to Florida corporate laws to form a corporation, but looking to see if your business name is available should be the top one. If a business name has been taken by another company, you will not be allowed to apply for this name, and your application will be denied.
Florida Statutes Chapter 607: Florida Business Corporation Act
To form a corporation, all the Florida corporation law requirements must be met and filed with the Department of the State. There can be one or more people that are the incorporators and deliver the articles of incorporation to be filed with the Department of State.
The articles of incorporation must have the following:
- A corporate name.
- The principal address for the office, and corporation mailing address if different.
- How many shares a corporation can issue.
- If preemptive rights will be given to shareholders.
- Address of registered office and registered agent's name along with a written acceptance.
- Each incorporator's name and address.
According to state laws, the name should have the words "company, "corporation," or "incorporated" in the name. They can also have the abbreviations "Inc.," "Co." or "Corp." to show that it's a corporation and not a partnership, person, or other type of business entity. The name shouldn't have any language that implies the corporation was formed for any other purpose than what's allowed by Florida law.
Delaware vs.Florida: Where Should You Incorporate?
Many companies prefer to incorporate in Delaware, as there are many famous publicly traded corporations who have incorporated there. That doesn't mean that the Delaware General Corporation Law is any better than the corporate laws in other states. Delaware is more developed because there are more case laws that interpret it. This means there's often greater certainty, which is important to management, directors, and investors. It's usually more expensive to maintain and incorporate a corporation in Delaware.
Unless the company is physically located in Delaware, a registered agent will need to be hired who lives in the state and can get all service of process on the company's behalf. The state also has a franchise tax that's based on the capitalization of the corporation. This is often higher than the taxes and fees that other states impose. As an example, Florida's yearly report fee, which is mandatory to be paid to the state every year, is only $150.
There are many good reasons to reincorporate or incorporate in Delaware, such as it being a condition for investment by a private equity investor. However, the higher costs of incorporating in Delaware often aren't justified. It's an easy process to switch a non-Delaware corporation to a Delaware corporation down the road if necessary. For most individuals who want to form a corporation, it's unnecessary to form one in Delaware.
In cases where the Delaware General Corporation Law (DGCL) permits it, a Blank Check Preferred Stock can be issued with limitations, relative rights, and preferences that are determined without stockholder approval by the corporation's board of directors. The Florida Business Corporation Act (FBCA) permits the same thing. A meeting of stockholders can be called under the DGCL by a person who's been authorized by bylaws or the corporation's certificate of incorporation.
It's not mandatory for a corporation to call this meeting due to the stockholders' request. The FBCA can call a shareholders' meeting by holders of no less than 10 percent or by those authorized by the articles of incorporation.
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