How to Form a Mutual Benefit Corporation in California

In California, the Secretary of State is responsible for chartering corporations and maintaining business filings. The Nonprofit Corporation Law (Section 5000 to 10,008) of the California Corporations Code governs the formation of nonprofit corporations. The Nonprofit Mutual Benefit Corporation Law (Sections 7110 to 8910) of the Corporations Code is specifically about this corporate type. According to the Secretary of State's Office, a mutual benefit corporation is "a nonprofit, nonstock" corporation formed for "other than religious, charitable, civic league or social welfare purposes." The corporation may be for educational, social, recreational or some similar purpose.

Things You'll Need

• Business model of corporation
• Name Availability Inquiry Letter
• Name Reservation Request Form
• Sample articles of incorporation

Instructions

How to Form a Mutual Benefit Corporation in California

1. Determine if the corporation you are forming meets the requirements for a mutual benefit corporation. The corporation may be for any legal purpose, but corporate assets must be "irrevocably dedicated to charitable, religious, or public purposes."

2. Create a structure for your corporation by drafting corporate bylaws. Bylaws establish the size of the Board of Directors, identify officers and establish the rules and procedures for board meetings.

3. Choose a name for the corporation. You can verify the name is available by sending a Name Availability Inquiry Letter to the Secretary of State. Reserve the name you have chosen by sending a Name Reservation Request Form. Both forms are available at the Secretary of State's website.

4. Copy the exact language used in the sample articles for a mutual benefit corporation that are available at the Secretary of State's website. Your corporate articles must meet all of the requirements set by the California Corporations Code. The Secretary of State's sample articles meet the minimum requirements.

5. Fill in your corporate information. Insert the name of your corporation in Article 1. Insert the corporate purpose in Article II B. Insert the name and address of the corporation's agent for service of process in Article III. The "agent for service" is the person authorized to receive legal documents on behalf of the corporation and must be a California resident.

6. Sign the articles. If the articles include the names of corporate directors, each director must sign. If directors have not yet been named, the individual or individuals filing the articles must sign. Type the person's name beneath each signature.

7. Mail the articles, along with a check for the filing fee, to the Secretary of State's main office in Sacramento or deliver them to a regional office. Current office addresses and the amount of the fee are listed in the document with the sample articles.

Tips & Warnings

• Two certified copies of the articles are included in the cost of the filing fee. The Secretary of State will certify additional copies for a small fee. Submit the number of copies you want certified when you submit the original.

• A nonprofit corporation is not automatically tax-exempt. If you want your corporation to have tax-exempt status, you must file a request with the Franchise Tax Board after the Secretary of State has endorsed your articles of incorporation.

References

• California Secretary of State
• California Secretary of State, Business Programs Division
• California Law, Corporations Code

Resources

• Foundation Center