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An Introduction to the Law of Corporations: Cases and Materials

DGCL Sec. 102 - Contents of Certificate of Incorporation

The certificate of incorporation is the corporation's basic governing document. It lays out the basic understanding about governance of the corporation and the corporation's powers. It also limits the power and discretion of the corporation's board of directors in the management of the corporation. To the extent they comply with the requirements of the corporation law, the promoters of a corporation have the flexibility to tailor the internal governance of the corporation as well as to limit the powers of the board of directors. The certificate of incorporation is contractual in nature. Initial stockholders have the ability, at least in theory, to negotiate the terms of their relationship with the corporation. Later stockholders take their stock pursuant to the terms of the certificate of incorporation already in place.

DGCL §102 describes the contents of every corporation's certificate of incorporation.  Section 102 has two basic components. First, §102(a) lays out the required elements of every certificate of incorporation.  Many of the required elements relate to notice (e.g. how can the state contact responsible parties in the corporation). To the extent some of the required elements of §102 seem out of place (e.g. par value), remember they were first included in the code following the transition from discretionary charters to general enabling laws. Consequently, they may reflect a number of vestigal elements of the corporate law.

Second, §102(b) lays out the optional elements of every certificate of incorporation. Many of the optional elements in a certificate relate to corporate governance rights of stockholders and/or the board of directors. Section 102(b) does not generally limit promoters' ability to tailor governance structures, but it does often provide promoters with menus of options that they can choose from as they draft certificates.