Business Terms for Delaware Companies

By Andrew Millman Tuesday, April 9, 2019

If you own a Delaware company, there are several important date-related business terms you should be familiar with so you fully understand all your documents and important dates to keep your company in compliance.

Business Terms for Delaware Companies

Date of Formation – Date of Formation is the day when the Certificate of Formation, which includes the Articles of Organization, is filed with the Delaware Secretary of State as you form a Delaware LLC.  Unless an alternate Effective Date is specified, this day is the official birthday of the LLC.

Date of Incorporation – Date of Incorporation is the day when the Certificate of Incorporation, including the Articles of Incorporation, is filed with the Delaware Secretary of State as you incorporate a Delaware Corporation.  Unless an alternate Effective Date is specified, this day is the official birthday of the corporation.

Perpetual Existence – Traditionally, Delaware LLCs, LPs, and corporations are designed to continue indefinitely and continuously, regardless of any change of members, shareholders, officers, Directors or partners, unless a predetermined length of existence is otherwise specified, or the company is administratively or voluntarily cancelled or dissolved.

Effective Date/Time – A specific date and/or time can be chosen to be the Effective Date and/or Effective Time of the filing, whether it’s the original Certificate of Formation, an amendment or the Certificate of Cancellation/Dissolution. Business owners do this for a couple of different reasons; the most common reason to create an Effective Date is when a person files a company in December but chooses an effective date of January 1 of the following year. (This extends the Franchise Tax deadline by an additional year.) There are many other reasons company owners may opt for a specific effective date, such as a birthday, an anniversary or a lucky number.

Date of Dissolution – Date of Dissolution is the day the Certificate of Dissolution is filed with the Delaware Secretary of State in order to formally close a Delaware Corporation, unless a different Effective Date has been specified.

Date of Cancellation – Date of Cancellation is the day the Certificate of Cancellation is filed with the Delaware Secretary of State in order to formally cancel a Delaware LLC, unless a different Effective Date has been specified.

Date of Amendment – Date of Amendment is the day the Certificate of Amendment is filed with the Delaware Secretary of State when a Delaware corporation, LLC or LP files an amendment in order to update the company name, increase the number of shares or add preferred shares.  

Fiscal Year-End/Closing Month –Fiscal Year-End, otherwise known as the end of the accounting year or the closing month, is the end of the actual business year. Some business owners follow the traditional calendar year, January 1 through December 31, while others choose an alternative business year, June 1 through May 31 of the following year, for example.

For a detailed explanation of some of the documents described above, please read Company Formation Documents, Defined.

 

Disclaimer

THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.

More By Andrew Millman

There is 1 comment left for Business Terms for Delaware Companies

Muhammad Younas said: Friday, December 29, 2017

What is needed to change an existing DE LLC into an S Corp?

HBS Staff replied: Friday, December 29, 2017

This webpage outlines what is involved in changing an LLC into an S corporation:

https://www.delawareinc.com/llc/s-corporation-tax-status-for-your-llc/

Your accountant or attorney is best suited to help you with the paperwork.

Leave a Comment
* Required
* Required, will not be published