Guide to Creating a Pre-Incorporation Checklist

By Elspeth Crawford

The Pre-incorporation Checklist (PIC) is an attorney-drafted agreement used by individuals and entities prior to forming a corporation. The PIC lays out material terms between the prospective shareholders so that there is no confusion once the corporation is actually formed. The goal of the PIC is to lay out the essential and material terms between the prospective shareholders so that there is no confusion once the corporation is actually formed.

Having a PIC can facilitate the process of exploring pre-incorporation considerations with the principals of the corporation and gathering the information necessary to prepare organizational documents for the corporation.

Such a checklist should cover such things as:

General:

• Proposed name for the corporation (with alternatives).
  
  
• State of incorporation.
  
  
• Who the incorporator will be.
  
  
• Location of the corporation’s initial registered office.
  
  
• Name of the corporation’s registered agent.
  
  
• Amount of stock the corporation is authorized to issue.

Capitalization of the Corporation:

• The nature and quantity of the stock to be used at the time the corporation is organized.
  
  
• Whether warrants and options will be issued at that time.
  
  
• Names and addresses of persons who will subscribe for stock, warrants, and options.
  
  
• The nature and amount of consideration to be contributed to the corporation by each such person in exchange for the stock, warrants, and options.
  
  
• The amounts and terms of any such loans.
  
  
• Whether shareholders or holders of warrants or options will make loans to the corporation.
  

Management of Corporation:

• The number of members the corporation’s board of directors will have.
  
  
• The names and addresses of the initial directors.
  
  
• The number and type of officers the corporation will have.
  
  
• The names and addresses of the initial officers.
  
  
• The dates of annual directors’ and shareholders’ meetings.
  
  
• Any special requirements for shareholder action, including supermajority voting requirements for approval of particular corporate actions, if any.

Fiscal Information:

• The certified public accountant for the corporation.
  
  
• What fiscal year the corporation will be using.
  
  
• Whether agreements between the corporation and its shareholders, such as buy-sell agreements , employment agreements, or agreements to maintain S corporation status, should be prepared before the organizational meeting of the directors of the corporation so that they can be approved at that meeting.
  
  
• Any banks or financial institutions with which the corporation will maintain deposit accounts.

Other:

• The checklist should also list the optional provisions that might be included in the articles, such as preemptive rights and cumulative voting, so that a decision can be made on the inclusion of these items before the articles of incorporation are filed.
  
  
• The existence of any requirements of filings under federal or state securities laws before stock of the corporation is offered to prospective subscribers.
  
  
• If exemptions from registration requirements may be available, the exemptions and the requirements to qualify for the exemptions.