A certificate of incorporation — also called the corporate charter — is the state-filed document that legally forms a corporation and sets foundational equity terms.

How it works

For VC-backed startups, incorporation usually happens in Delaware as a C-corp. The charter specifies:

• Company name and registered agent
• Authorized share counts and par value
• Classes of stock — common and preferred series with economic and voting rights
• Liquidation preferences, dividends, conversion terms (often amended each financing)

Each priced round typically requires a charter amendment filing to authorize new preferred series. Bylaws govern operations; the charter controls when bylaws conflict on shareholder rights.

Founders receive common stock at formation; investors receive preferred defined in amended charters attached to term sheets.

Amended charters are public filings in Delaware — future investors can read liquidation preference stacks directly from the certificate. Sensitive commercial terms still live in stock purchase agreements, but core economic rights appear in the charter text.

Why it matters

• Founders: Read liquidation preference language before you sign Series A amendments — it survives years and shapes exit proceeds.
• Investors: Charter is the source of truth for preferences and protective provisions; diligence compares charter stack to the cap table model.

Common mistake

Assuming verbal term sheet economics override the filed charter. Only executed charter amendments and stock purchase agreements create enforceable rights — board slides and email threads do not.

Related ideas

See also bylaws, cap table, liquidation preference, and change of control.