Incorporation Letter

Letter to Client regarding Newly Incorporated Corporation

Document 1067A www.leaplaw.com

Access to this document and the LeapLaw web site is provided with the understanding that neither LeapLaw Inc. nor any of the providers of information that appear on the web site is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, you agree that you will obtain the services of a competent, professional person and will not rely on information provided on the web site as a substitute for such advice or assistance. Neither the presentation of this document to you nor your receipt of this document creates an attorney-client relationship.

[ ], 20[ ]

[By overnight courier]

[NAME] [ADDRESS]

Re: Incorporation of [NAME OF COMPANY]

Dear [ ]:

I am enclosing for your records a binder containing copies of all of the documents related to the incorporation of [NAME OF COMPANY] (the “Company”). [An identical binder is being forwarded to [NAME OF COMPANY’S ACCOUNTANT].]

The corporate minute book, stock book, seal and outstanding stock certificate(s) are currently being held by me for safekeeping.

As you may know, you will need to adhere to certain formal record-keeping requirements in order to help ensure that actions taken by the Company comply with [STATE] law. Formal written consents or minutes will need to be executed by the board of directors and/or the stockholders of the Company and filed in the Company’s minute book in order to authorize certain actions. By way of example, when you open your corporate bank account, please forward a copy of the bank’s form of corporate resolutions to me so I can prepare the appropriate written consents. Formal written consents or minutes will also need to be executed and filed each year to elect corporate officers. In addition, the Secretary of State of the [STATE] will need to be kept abreast of any changes to the Company’s board of directors or officers.

I have outlined below some general guidelines concerning certain fundamental requirements related to corporate record-keeping.

Annual Report.1 Each year, [STATE] corporations are required to file an annual report with the Secretary of State within [ ] months following the fiscal year end of the corporation.

Because the fiscal year end of the Company is [DATE], the annual report will be due by [ ] each year. The annual report must be filed using an original form provided by the Secretary of State and signed under penalty of perjury by a corporate officer. The filing fee is $[ ].

1 Information in this section of the letter should be prepared only after reviewing the annual report requirements of the business corporation law of the state of incorporation. New Corporation Letter www.leaplaw.com There can be penalties for failure to file the annual report. If the annual report is filed late, a penalty of $[ ] penalty may be assessed. Late filing or neglecting to file may also result in the revocation of the corporation’s charter. Often, the accountant files the annual report at the same time as the corporation’s corporate tax returns. Please let me know if you want to have me prepare and file the Company’s annual report. Otherwise, we will assume that either you or your accountant will do so.

Minute Book. If the Company is ever audited by the Internal Revenue Service or involved in litigation, the minute book will probably be examined. The minute book should contain documentation regarding all significant activity of the Company from its incorporation to its dissolution. In particular, the minute book should contain signed meeting minutes or written consents to action, copies of documents which have been filed with the Secretary of State and the Internal Revenue Service (other than tax returns), and other documents such as leases and major agreements to which the Company is a party. Throughout the life of the Company, the material to be filed in the minute book should be prepared and signed on a timely basis.

Examples of the type of events that should be recorded and approved in writing by the board of directors are:

1. an unusually high bonus or an important change in salary paid to an officer or key employee;

2. an amendment to the Company’s bylaws;

3. the opening of a bank account or investment account or a change in signatories on such account;

4. the declaration and payment of cash or stock dividends;

5. the adoption of a major agreement;

6. qualification of the corporation to do business in another state; and

7. any document signed by a corporate officer stating that execution of the document was authorized by the board of directors.

Examples of transactions that could potentially be “related party transactions”, which should be recorded and approved in writing by a majority of “disinterested” directors are:

1. the adoption of a lease for real property or equipment, whether or not the lessor is a related party;

2. the adoption of an employee benefit plan or yearly contribution to a profit sharing plan;

3. a major borrowing, especially from a related party, and any loans to officers, employees, shareholders or other related parties [the stockholders should approve

New Corporation Letter 2 www.leaplaw.com these matters if there would not be enough disinterested board directors to duly take a decision];

Both the board of directors and the stockholders would need to approve:

1. an increase in the authorized capital stock of the Company, or a change in the par value or rights and preferences of existing shares of capital stock;

2. any amendment to the [NAME OF COMPANY’S CHARTER DOCUMENT] (the “Charter”);

Generally, there should be signed documentation for any event not in the ordinary course of business. If you have any questions as to whether a certain corporate action needs authorization from the board of directors or the stockholders, please call me.

Amendments to the Charter.2 Whenever a corporation desires to amend information that has been included in the corporation’s charter, the corporation must file a certificate of amendment with the Secretary of State signed by the secretary of the corporation setting forth the amendments. For example, a certificate of amendment to the Charter would need to be filed if the Company were to create a new class of stock or change its corporate name. Simply submitting the change as part of the next annual report will not effect a change in the Secretary of State’s records.

A change of fiscal year end requires short-year filings with the Secretary of State and the [NAME OF STATE’S DEPARTMENT OF REVENUE] (the “Department of Revenue”). It is important that you first contact me and your accountant when considering such a change.

It is important that the minutes and written consents of the board of directors and the stockholders and filings regarding these types of changes be kept up to date. Delinquencies and discrepancies in the Secretary of State’s records can delay a transaction for which the Company might need official evidence of legal existence or a tax clearance, such as a sale of the Company or the initiation of business activity in another state.

Department of Revenue. Changes in the Company’s name or address, or changes in the Company such as a change in sales tax, use tax or income withholding tax liability, should be recorded with the Department of Revenue. It is especially important that a change of corporate address be registered promptly. Certain notices issued by the Department of Revenue require a response within a limited time period and severe penalties may be imposed if the response is not made within the specified time.

License and Permits. If the Company is required to apply for any licenses or permits in connection with its business, a copy of the application and of the license or permit should be forwarded to me for inclusion in the corporate records. In addition, some agencies require the approval of the board of directors before a corporation applies for a license or permit.

2 Information in this section of the letter should be prepared only after reviewing the charter amendment requirements of the business corporation law of the state of incorporation. New Corporation Letter 3 www.leaplaw.com

Throughout the year, please feel free to call me with any questions you have or with any information you think I should be aware of regarding the corporate records of the Company.

Very truly yours,

Enclosures cc w/enclosures: [NAME OF ACCOUNTANT]

New Corporation Letter 4 www.leaplaw.com