Corporate charters are funding documents related to the establishment and ongoing function of a corporation. In most countries, the corporate charter is filed with a government jurisdiction that is empowered to authorize and register the establishment of the business. The corporate charter is usually not a single document, but actually a collection of several documents, based on the requirements that are necessary to comply with local laws.
In a broad sense, a corporate charter will serve as a means of defining the purpose for the creation of the corporation. This means the charter will specify the type of corporation that is being established and the industry that the company will function within. This amount of detail provides a legal basis for identifying what laws and regulations may be directly applicable to the ongoing operation of the company.
In addition, any applicable details as to if and how the corporation will be allowed to issue stocks is included. Even if the new corporation does not plan on issuing stocks or bond issues in the immediate future, the structure of the charter will help to dictate what types of investment opportunities the company can extend to potential investors. At the same time, the corporate charter will provide information on the basic rights and privileges extended to investors as well as to members of the board of directors.
The Articles of Incorporation are one of the documents that are included in the overall corporate charter. In the United States of America, states are authorized to grant registration privileges to corporations. In order to receive legal recognition to function as a business, the company must submit the Articles of Incorporation for consideration. If the information is judged to meet the standards for incorporation set by the state, a certificate of incorporation is issued. These two documents combined are understood for form the core of the corporate charter.
A corporate charter or articles of charter can be amended over time. This is often the case when a corporation chooses to change focus in some manner, or grows to a point that there is a need to amend details relating to the issuance of stocks and securities. Also, some states require that amended Articles of Incorporation be submitted when there are changes to the number and the identity of persons serving on the Board of Directors.