When you form a corporation, you’re not just creating a legal entity — you’re building a structure that will govern how your company makes decisions, issues equity, and interacts with investors for years to come. The governance documents that establish that structure aren’t exciting reading, but they’re foundational. And when a capital raise is on the horizon, investors will look at them closely.
Understanding what these documents are, what they do, and how they need to be maintained is one of the more practical things a founder can do early — before the structure becomes complicated and the stakes get higher.
If you are interested in a Limited Liability Company, check out this article instead.
The Certificate of Incorporation
The certificate of incorporation — sometimes called the articles of incorporation — is the document that formally creates your corporation under state law. It’s filed with the state (most venture-backed startups incorporate in Delaware) and establishes the most fundamental facts about your company: its name, its registered agent, and critically, its authorized share structure.
As covered elsewhere in this series, the authorized share count set in your certificate of incorporation defines the ceiling for how much equity you can issue. Changing it requires a formal amendment and a shareholder vote. Your certificate also establishes the classes of stock your company is authorized to issue — typically common stock at formation, with preferred stock added later when outside investors come in.
Investors review the certificate of incorporation to confirm that your share structure is what you say it is and that the company has the legal authority to issue the shares being offered in a financing. Discrepancies between your certificate and your cap table are a diligence red flag that creates real friction.
Bylaws: How Your Corporation Operates Day to Day
If the certificate of incorporation is your company’s founding document, the bylaws are its operating manual. Bylaws govern how the corporation conducts its internal affairs — how the board of directors is structured, how meetings are called and conducted, how officers are appointed, and how major decisions get made.
Well-drafted bylaws create clarity around decision-making authority — quorum requirements for board and shareholder votes, officer roles, and procedures for things like removing a director or filling a board vacancy. These procedures can feel abstract at the early stage, but they become concrete when there’s a co-founder disagreement, a board seat is contested, or an investor wants to understand how decisions get made before committing capital. Investors will review bylaws during diligence to confirm that the actions taken to authorize a financing were properly conducted.
Board Resolutions and Written Consents
Every significant corporate action — issuing shares, adopting an equity plan, approving a financing, approving major agreements, appointing an officer — needs to be authorized by the board of directors, and that authorization needs to be documented.
For early-stage companies, this typically happens through written consents rather than formal meetings — documents signed by the directors approving a specific action. It’s the paper trail that proves a decision was made properly and by the right people.
This is an area where many early-stage companies fall behind. Shares get issued, people get hired, agreements get signed — and the board approvals that should document those actions never get papered. By the time a financing arrives, there’s a backlog of undocumented actions that need to be ratified before closing.
Shareholder Agreements and Voting Agreements
As a corporation brings in outside investors, additional agreements layer on top of the foundational documents. Shareholder agreements and voting agreements establish rights and obligations among shareholders that go beyond what’s in the certificate and bylaws — things like rights of first refusal on share transfers, co-sale rights, drag-along provisions, and information rights.
These agreements become more complex with each financing round as new investors negotiate for protective provisions and governance rights. Check out this article on the typical documents for a Series A venture financing.
Understanding what’s already in place before entering a new round matters — both because existing agreements may give current investors rights that affect a new deal, and because incoming investors will want to know what rights they’re buying into alongside their shares.
Staying Current as Your Company Grows
Governance documents aren’t static. As your corporation evolves — adding investors, expanding the board, amending the equity plan, creating new share classes — the underlying documents need to be updated to reflect those changes. A certificate of incorporation that hasn’t been amended to reflect multiple rounds of preferred stock, or bylaws that still describe a two-person board when five people are making decisions, creates confusion and diligence problems.
Founders who move through financing rounds smoothly tend to treat governance hygiene as an ongoing responsibility, not a one-time task at formation. Keeping documents current and maintaining clean records of board approvals are habits that pay off when capital is on the table.
If you’re forming a corporation and want to make sure your governance structure is built for future growth, or if you’re preparing for a raise and want to review what you have in place, we’re glad to help.
Frequently Asked Questions
What is a certificate of incorporation and what does it establish?
The certificate of incorporation is the document that legally creates your corporation under state law. It establishes your company’s name, registered agent, and authorized share structure — including how many shares the company is permitted to issue and what classes of stock exist. It’s filed with the state and can only be amended through a formal process requiring shareholder approval.
What are corporate bylaws?
Bylaws are the internal rules that govern how a corporation operates — how the board is structured, how decisions are made, how officers are appointed, and how meetings are conducted. They sit alongside the certificate of incorporation as one of the two foundational governance documents every corporation should have.
Why do investors review governance documents during diligence?
Investors want to confirm that the company’s legal structure matches what they’ve been told, that equity was properly authorized and issued, and that the board approvals authorizing the financing were conducted correctly. Gaps or inconsistencies in governance documents can slow a deal or require cleanup before it closes.
What are board resolutions and why do they matter?
Board resolutions — typically documented as written consents for early-stage companies — are the formal record of decisions made by the board of directors. Every significant corporate action should be backed by a board resolution. Companies that haven’t kept up with this documentation often have to ratify past actions as part of financing diligence.
When do shareholder agreements become relevant?
Shareholder agreements typically become relevant when outside investors come in. They establish rights among shareholders — transfer restrictions, co-sale rights, drag-along provisions — that go beyond what’s in the foundational documents. Existing shareholder agreements can affect what new investors are willing to accept, so understanding what’s already in place before entering a new financing matters.
