Certificate of Determination – Domestic Stock Corporations

In order to form a Domestic Stock Corporation (DSC) in the state of California, you need to file the articles of incorporation along with the certificate of determination. Many documents cannot be filed due to name errors or misstatements. It is always better to take the help of a private attorney in order to get a better hold of your specific business needs.

1) The name of the corporation should be exactly the same on the Certificate of Determination as mentioned in the records of the California Secretary of State.
You should be very specific as slight punctuation errors could also cause problems.

2) The rights, preference, privileges, and restrictions of shares including the terms which are fixed by the board of directors must be established in the form of an Officer’s Certificate before issuing those shares under California Corporations Code section 173, 194 and 401.

3) If you wish to provide an attachment or exhibit for reference which includes the rights, privileges, preferences and restrictions of shares as provided by the board of directors with the Officer’s Certificate then you must be specific and should provide in writing that you have provided the information of the shares ‘incorporated by references as if fully set forth’ under the California Corporations Code 193 and 401

4) You should verify and date all the contents of the Certificate of Determination and the officers signing it should be aware of all documents, inputs and references present with the letter. If not so, you will be penalized under perjury i.e. penalty for misrepresentation, under the California Corporations Code sections 173 and 193.

You should mention that the documents you are setting forth in the certificate are verified and you are aware of all of them. It should be signed the date it is formed; post-dated documents are declined for filing.

5) You should be sure that it is not you or a person who represents your corporation signed the certificate; rather it should be verified and signed by the appropriate officers.
Apart from the title of the officer’s names, you should avoid any indications around or near the signature line signifying your corporation.

6) Although the preferences, privileges and restrictions are to be specified by the board of directors, you should be positive that they are authorized.
If the board fails to do so, then the numbers, rights, preferences should be put forward as an an amendment to the articles, rather than the board setting forth a certificate of determination. This is mentioned in the California Corporations Code section 202(e) and 401(a).

7) You should also be sure that you set the Officer’s Certificate separately which would include:

– A copy of the resolution

– The number of shares of the class or series

– Verification that none of the shares have been issued

8) In case the number of shares increase or decrease after filing the Certificate of Determination and if you already authorized them in the articles then under the code section 401(c) you must also set forth:

– A copy of the resolution

– The number of shares of the series then outstanding

– The increase or the decrease in the number of shares in the series
Finally, be sure the certificate is verified, signed and the specific documents or exhibits are attached.