Florida is a haven for entrepreneurs and small business owners eager to start new ventures. When a business owner chooses to form a Florida Corporation, it is important to know the governing documents that are required under Florida law. Below is a primer on the common documents and agreements applicable to a Florida corporation with references to the Florida statutes that govern them.
| Agreement | Required under Florida Law? | What does it do? |
| Articles of Incorporation | Yes. Fla. Stat. 607.0202 sets forth the required information to be included in the articles for the formation of a Florida corporation. | Incorporates a Florida Corporation. Most use the form prescribed by the Division of Corporations, but more detailed forms may cover many of the operational items covered in the bylaws, such as identifying the officers of the Florida corporation, the duties, term of service, and dissolution or wind up of the corporation. |
| Bylaws | Yes. Fla. Stat. 607.0206 requires that the incorporators or board of directors adopt bylaws (unless the power to adopt is vested with the shareholders by the Articles of Incorporation). | Bylaws act as a manual for the operations of the corporation. The bylaws spell out the duties of the board of directors and officers, how officers and directors are appointed and removed, how to handle disputes, how to dissolve the corporation. Bylaws are not filed with the state of Florida and are an internal document. |
| Shareholder Agreement | No. Fla. Stat. 607.0732 governs shareholder agreements. This agreement is optional. | A shareholder is an owner of part (shares) of the corporation. A Shareholder Agreement regulates the shareholder’s rights and the relationship between the shareholders and the Florida corporation and often includes provisions not covered in the bylaws and more lengthy articles of incorporation. |
| Share Certificates | No. Fla. Stat. 607.0625 provides that share certificates are not required for the issuance of shares. | If share certificates are issued, then Fla. Stat. 607.0625 sets forth what is required to be included on each certificate. |
CONSEQUENCES OF NOT HAVING THE REQUIRED GOVERNING DOCUMENTS
The following are some consequences that could flow from not having the corporate governing documents that are required under Florida law:
- The liability protection a corporation provides to owners/shareholders is compromised when the shareholders do not observe and comply with the legal formalities for maintaining a corporation under Florida law. Creditors may have an easier time in “piercing the corporate veil” to reach the personal assets of shareholders to satisfy a corporate debt.
- The corporation may have issues in getting financing from the SBA or traditional commercial lenders without the governing documents that are required by law.
- If this is a closely held corporation with only a few shareholders that work to operate the business together, it will be unclear what happens to your rights and interest should you become disabled or pass away. Are you kids now business partners with the other shareholders or do the shareholders have to compensate your family for the interest? Who knows?
MORE ABOUT THE DIFFERENCE BETWEEN BYLAWS & SHAREHOLDER AGREEMENTS
Bylaws govern the operations and set forth the structure of the corporation required under Florida law while a shareholder agreement is an optional agreement that manages the relationship of the corporation with the shareholders and attempts to provide a process for resolving disputes without the dispute negatively affecting the corporation.
Shareholder Agreements often address items not addressed in the bylaws, such as limitations or restrictions on the transfer or sale of shares, establishing “Tag Along” or “Drag Along” rights, non-solicitation provisions, or buy/sell provisions that are triggered upon a shareholder’s death or a shareholder’s wish to step away from the Florida corporation.
Roberts Law, PLLC is happy to assist business owners that are getting started, getting in compliance, or growing. Contact us for a free consultation to discuss your needs and how we can help your business run smoothly.
Kelly Roberts is a business and bankruptcy attorney at Roberts Law, PLLC with over a decade of experience assisting business and business owners to navigate contracts, partnership structures, negotiations, and dispute resolution. Kelly earned her Juris Doctorate from the University of Miami School of Law.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction or the jurisdiction applicable to your issue/matter. No information contained in this post should be construed as legal advice from Roberts Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
