Corporations in Mississippi

Corporations are governed by the Mississippi Business Corporation Act, codified at Miss. Code Ann. §§ 79-4-1.01 et seq.  A corporation is a distinct legal entity and can thus sue and be sued, open a bank account, own property, and do business, all under its own name. Unless otherwise specified, every corporation has perpetual duration and succession in its corporate name.

To form a corporation, articles of incorporation must be delivered to the Secretary of State for filing. Unless a delayed effective date is specified, the corporation’s existence begins when the articles are filed. The articles of incorporation must set forth a corporate name unique to MS that contains the word “corporation,” “incorporated,” “company” or “limited,” or the respective abbreviation with language that does not state or imply a purpose other than its own, the contact information for the corporation’s initial registered office and registered agent at that office, and the contact information for each incorporator. The articles must also include the classes of shares and the number of each class that the corporation is authorized to issue. If more than one class is authorized, a distinguishing designation must be prescribed for each class and, prior to issuance, the preferences, rights and limitations of each class must be included. Finally, the articles must authorize one or more classes of shares that together have unlimited voting rights, and one or more classes of shares that together are entitled to receive the net assets of the corporation upon dissolution. Mississippi law also permits optional provisions to be integrated into the articles of incorporation. For example, the names and addresses of the individuals who are to serve as the initial directors may be included.

The incorporators have the option to incorporate as either a C-corporation or Subchapter S-corporation.  If incorporated as a C-corporation, the corporate profits are taxed, and then the owners will be taxed on their share of the profits and compensation (i.e. dividends and wages) received from the corporation.  A Subchapter S-corporation, however, does not pay a corporate tax. A Subchapter S-corporation election may only be made by a small business corporation having less than 100 shareholders.  To form a Subchapter S-corporation, an election must be made under 26 U.S.C.S. § 1362(a).  Once such election is made, the organization will remain a Subchapter S-corporation until the election is terminated.

The incorporators or board of directors must adopt initial bylaws for the corporation which may contain provisions for managing and regulating the corporation. Unless an agreement among shareholders eradicates it, each corporation must have a board of directors. The board must consist of one or more individuals with the number specified in or fixed in accordance with the articles of incorporation or bylaws. Unless the articles of incorporation or bylaws state otherwise, a director need not be a resident of this state or a shareholder of the corporation. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of, its board of directors, subject to any limitation set forth in the articles of incorporation or in an agreement between shareholders. Each member of the board of directors has a duty to act in good faith and in a manner that he or she reasonably believes to be in the best interests of the corporation.

Directors cannot be held liable to the corporation or its shareholders for any decision to take or not to take action or any failure to take any action, as a director, unless the party asserting liability establishes that other legal authority does not preclude liability and that the challenged conduct was the result of bad faith, an uninformed decision, a decision made upon a lack of objectivity, a decision made due to a sustained lack of being informed, or a decision made for purpose of receipt of personal financial benefit.

The board of directors may elect individuals to fill one or more offices of the corporation.  Such officers must fulfill their duties in good faith, with the care that a person in a like position would reasonably exercise under similar circumstances, and in a manner the officer reasonably believes to be in the best interests of the corporation. An officer cannot be held liable to the corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, as an officer, if the duties of the office are performed in compliance with the Mississippi Business Corporation Act.  Unless directors are elected by written consent in lieu of an annual meeting, a corporation’s shareholders are required to meet annually in or out of Mississippi at a place and time stated in or fixed in accordance with the bylaws. If a place is not stated, the meetings will be held at the corporation’s principal office. A corporation may also hold special shareholders’ meetings. A corporation must notify shareholders entitled to vote at the meeting of the date, time and place of each annual and special shareholder’s meeting no fewer than 10 or more than 60 days before the meeting date. A shareholder may vote his shares in person or by proxy or by participating in a voting trust. Shareholders cannot be held personally liable for the acts or debts of the corporation but can become personally liable by reason of their own acts or conduct.

Professional Corporation

Pursuant to the Mississippi Professional Corporation Act, codified at Miss. Code Ann. §§ 79-10-1 et seq., incorporators may choose to incorporate as a professional corporation. Professional corporations are also governed by the Mississippi Business Corporation Act.  A corporation may elect professional corporation status solely for the purpose of rendering professional services and solely within a single profession. A corporation may, however, elect professional corporation status to render professional services within 2 or more professions so long as that combination is not prohibited by the licensing law of this state applicable to each profession in the combination.

A professional corporation is formed by delivering articles of incorporation to the Secretary of State which state that it is a professional corporation and its purpose is to render the specified professional services.  A professional corporation must have a name that contains the words “professional corporation” or “professional association” or the respective abbreviations.