The corporation and its documents
A corporation is a legal person separate from its owners, created when a state accepts its certificate of incorporation. Its owners, the stockholders, are not personally liable for its debts, and its internal affairs are governed by the law of the state where it was formed. The first handbook covers this in more depth.
Two documents govern it alongside the statute. The certificate of incorporation, filed with the state, sets the name, purpose and authorized stock and a few protections that can only live there; it is public and hard to change. The bylaws, adopted privately, set the operating rules for directors, meetings, quorum, officers and stock transfers, and in most startups the board can amend them. Where the documents are silent, the Delaware General Corporation Law supplies the rule, and where they conflict with it, the statute wins.
Two roles need only a brief word. Every Delaware corporation must keep a registered agent in Delaware to receive lawsuits and state mail; a missed lawsuit can turn into a default judgment and a lapsed agent can cost the company its good standing, so keep the agent paid and its contact details current. The incorporator signs and files the certificate and names the first directors, and that is the end of the role. It carries no stock, vote or ongoing duty.
The board of directors
The board of directors manages the business and affairs of the corporation (DGCL section 141(a)). In practice that means the board issues stock and grants options, appoints and removes officers and sets their pay, approves financings, borrowing and major contracts, adopts stock plans and approves 409A valuations, and recommends fundamental changes such as charter amendments or a sale of the company, which stockholders then vote on. Day-to-day work belongs to the officers. Founders blur the line because they are usually directors and officers at once, but the paperwork has to respect it: if something needs board approval, the founders must approve it as directors, in writing, even though they also run the company.
A board acts only as a body. It can vote at a meeting where a quorum is present (Corply's standard bylaws set quorum at a majority of the directors in office), or it can act without a meeting by unanimous written consent, signed by every director, under section 141(f). Electronic signatures count. Early-stage boards act almost entirely by written consent, which is quick and leaves a clean record. Boards with outside directors usually also meet regularly, often quarterly, and keep minutes.
Stockholders elect directors, at an annual meeting or by written consent, and the bylaws set the number of seats. Most startups start with one to three directors, usually the founders, and investors in a priced round typically negotiate for one or more seats, which makes the board's makeup a central term of every financing. Under section 141(k) holders of a majority of the voting shares can generally remove a director with or without cause, and a director can resign at any time by written notice.
Directors owe the corporation and its stockholders fiduciary duties. The duty of care asks them to decide on an informed basis: read the materials, ask questions, take the time the decision needs. Under the business judgment rule, courts do not second-guess an informed, good-faith decision by directors without a conflict, even one that turns out badly, and startup charters usually remove personal money damages for care violations altogether. The duty of loyalty asks directors to put the company's interests ahead of their own, and it cannot be waived. It matters most when a director is on both sides of a decision: setting their own pay, buying stock in a round they helped negotiate, or approving a contract with another company they own. Such decisions are not forbidden. Section 144 sets out ways to approve them safely, usually full disclosure followed by approval from the directors or stockholders who have no interest in the outcome. The habit to build early is simple: when a decision benefits a director personally, say so in writing and let the others decide.
Officers
Officers are the people the board appoints to run the company, typically a chief executive officer, a secretary and often a chief financial officer. The bylaws list the offices, section 142 requires enough of them to sign stock certificates and keep minutes, and one person may hold several. A two-founder startup often has one founder as CEO and the other as secretary, or one founder holding every office.
An officer's authority comes from the board and the bylaws. The CEO generally has authority over ordinary business, but some acts need specific board approval whoever signs: issuing stock, granting options, borrowing significant amounts, selling major assets. Titles like CTO or Head of Product are job titles, not corporate offices, unless the board appoints someone to that office.
Stock
Three numbers describe a company's stock, and confusing them causes most cap table mistakes. Authorized shares are the most the company may issue under its charter; authorization is a ceiling and nobody owns authorized shares. Issued shares are those the company has actually sold or granted. Outstanding shares are issued shares someone still holds, so shares the company buys back stop being outstanding. Your ownership percentage is the shares you hold divided by the shares outstanding or, for planning, by the fully diluted total. Unissued shares never count.
A company can have more than one kind of stock. Founders, employees and option holders hold common stock. Investors in priced rounds buy preferred stock, which carries rights common stock lacks, such as a liquidation preference and protective votes. Preferred stock is issued in series, one per financing (Series Seed, Series A, Series B), each with its own price and sometimes its own rights. The charter must authorize every class and describe its rights. Corply's standard charter authorizes one class of common stock, and preferred stock is added at the first priced round by amending and restating the charter.
Issuing stock is a formal act with four requirements, and missing any of them leaves a defect that surfaces in diligence. The charter must authorize enough shares of that class. The board must approve the issuance, the number of shares and the price (sections 152 and 153), and founders are no exception. The buyer must pay at least par value, in cash, property, past services or another benefit the board accepts. And the sale needs an exemption from securities registration, because every share and every option is a security. Founders buying at formation usually rely on Section 4(a)(2) of the Securities Act, employee equity on Rule 701 and investors on Regulation D. States have their own rules as well; California, for example, requires a notice filing for many issuances to its residents. The fundraising chapter covers these.
After an issuance the company records the shares in its stock ledger. Delaware allows certificated or uncertificated shares; most startups now issue uncertificated shares and send each holder a written notice containing what a certificate would have said, including any transfer restrictions (section 151(f)).
Startup stock cannot be sold freely. The bylaws and stock agreements usually give the company a right of first refusal on any proposed sale, require board approval for transfers and forbid transfers that would force the company to register with the SEC. These restrictions are enforceable when they are noted on the certificate or notice (section 202), and they keep the cap table under the company's control.
Contracts
A contract binds the company only if someone with authority signs it for the company. Sign as an officer in the company's name, with a signature block like "Acme, Inc., by Jane Doe, Chief Executive Officer"; your own name with no company and title can make you a party personally. And get board approval where it is needed: large or unusual contracts, loans, anything with a founder on the other side, and anything the bylaws or a financing agreement reserve to the board.
Electronic signatures are valid for nearly every startup contract under the federal ESIGN Act and state electronic transactions laws. Keep a signed copy of every contract in one place, because diligence will ask for them. And watch for contracts that reach founders personally. Landlords, lenders and some vendors ask for a personal guarantee, which makes you liable if the company does not pay. That may be a reasonable trade, but make it knowingly.