Certificate of Incorporation

The certificate of incorporation is the foundational document filed with the secretary of state establishing the corporation as a legal entity. Also called articles of incorporation, charter, or certificate of formation, it contains the company name, authorized share counts and classes, registered agent, purpose, and other foundational provisions, and is amended at each priced financing to authorize new share classes (Series Seed Preferred, Series A Preferred) and reflect their negotiated rights. It is the document where the actual legal terms of preferred stock live; term sheets summarize what becomes legally binding in the certificate.

The standard contents:

Company name and address: official name; registered office address.

Registered agent: who receives legal service for the company.

Purpose: typically "any lawful business activity" (broad).

Authorized share counts and classes: total authorized common, each preferred series authorized.

Preferred stock rights: liquidation preference, anti-dilution, voting rights, conversion mechanics, protective provisions, dividend rights, redemption rights (sometimes).

Director liability provisions: indemnification, exculpation.

Other provisions: stockholder action by written consent, special meeting calls, amendment requirements.

Why the certificate matters more than the term sheet:

Term sheet: summarizes key terms; not legally binding.

Certificate: the actual legal terms; binding on all stockholders.

Differences emerge in drafting: counsel translates term sheet bullets into specific legal language; nuances matter.

Read the certificate: always. Term sheet summaries can be deceptive when drafted into specific provisions.

Certificate amendments at financings:

Each priced round amends the certificate to:

• Authorize the new preferred class.
• Define rights of the new class.
• Sometimes adjust prior preferred (e.g., conversion ratios).

Amendments require board approval and stockholder approval (with required class votes).

Becomes a stacked document: by Series C/D, certificates have multiple preferred classes with their own provisions.

Ryan's Take

The real terms of your preferred stock live in the certificate of incorporation, not the term sheet. So read the certificate, with counsel, at every financing, not just the bullet points you negotiated. The translation from term-sheet bullet to certificate provision is where things hide, and sometimes the certificate carries terms the term sheet never made obvious. Spend the time there. It's the document that actually binds you.

What founders get wrong: Reviewing only the term sheet without reading the actual certificate of incorporation, where the legally-binding provisions live. The right discipline: read the certificate at every financing with counsel; understand the specific provisions.

Related: [Articles of Incorporation] · [Bylaws] · [Authorized Shares] · [Preferred Stock] · [Delaware C-Corp]

FAQ

What is the certificate of incorporation? The foundational document filed with the secretary of state establishing the corporation as a legal entity. Contains company name, authorized share counts and classes, registered agent, purpose, and other foundational provisions. Amended at each priced financing.

Why does the certificate matter more than the term sheet? The term sheet summarizes key terms but isn't legally binding. The certificate contains the actual legal terms that are binding on all stockholders. Translation from term sheet to certificate matters; counsel translates bullets into specific legal language with nuances that can materially affect rights.

What gets amended at each financing round? The certificate is typically amended to authorize the new preferred class, define its rights, and sometimes adjust prior preferred (e.g., conversion ratios). Amendments require board approval and stockholder approval (with required class votes per protective provisions).