Incorporation vs. Ratification

Attribute	Incorporation	Ratification
Definition	The process of forming a new corporation	The formal approval or acceptance of something
Legal Status	Creates a new legal entity separate from its owners	Confirms or validates an existing agreement or contract
Authority	Requires approval from state authorities	Usually requires approval from relevant parties involved
Timing	Occurs before a corporation begins its operations	Occurs after an agreement or contract has been made

Definition

Incorporation and ratification are two legal processes that are often used in different contexts. Incorporation refers to the process of forming a new corporation, while ratification refers to the act of giving formal approval or consent to a legal document or agreement.

Legal Status

When a corporation is incorporated, it becomes a separate legal entity from its owners. This means that the corporation can enter into contracts, own property, and be held liable for its own debts and obligations. On the other hand, ratification does not create a new legal entity. Instead, it simply confirms or validates an existing agreement or action.

Process

The process of incorporation involves filing the necessary paperwork with the appropriate government agency, such as the Secretary of State. This paperwork typically includes the corporation's articles of incorporation, which outline the company's purpose, structure, and ownership. Once the paperwork is approved, the corporation is officially formed. Ratification, on the other hand, usually involves a formal vote or approval by the parties involved in the agreement.

Authority

When a corporation is incorporated, it is granted certain powers and authority by the state in which it is formed. These powers typically include the ability to enter into contracts, sue and be sued, and issue stock. Ratification, on the other hand, does not grant any new powers or authority. Instead, it simply confirms that the parties involved agree to be bound by the terms of the agreement.

Effect

Once a corporation is incorporated, it is considered a separate legal entity with its own rights and responsibilities. This means that the owners of the corporation are not personally liable for the company's debts and obligations. Ratification, on the other hand, does not change the legal status of the parties involved. It simply confirms that they agree to be bound by the terms of the agreement.

Timeframe

The process of incorporation can take several weeks or even months, depending on the jurisdiction and the complexity of the company's structure. Once the corporation is formed, it must comply with ongoing reporting and compliance requirements. Ratification, on the other hand, can be completed relatively quickly, depending on the parties involved and the complexity of the agreement.

Conclusion

Incorporation and ratification are two important legal processes that serve different purposes. Incorporation creates a new legal entity with its own rights and responsibilities, while ratification simply confirms or validates an existing agreement. Both processes have their own requirements, timelines, and effects, and it is important to understand the differences between them when considering which one is appropriate for a particular situation.