Founding DocumentsPosted: September 16, 2020
Note to readers: from time to time we accept submissions written by correspondents about topics they’re passionate about that fit into our frame of going to the source. Reader Billy Ouska sent us a writeup of something he’s passionate about, the founding documents of Facebook, and we’re proud to present it here. If you’d like to write for us, send us a pitch! – SH, editor.
The Social Network (now available to stream on Netflix) tells the story of the creation of Facebook through portrayals of the legal battles over its ownership. In a pivotal scene, cofounder Eduardo Saverin flies out to Facebook headquarters to sign some seemingly innocuous legal documents. Of course, the cut to Mark Zuckerberg watching furtively from afar tells the viewer that something is up. We later discover that Saverin has signed off on corporate restructuring that will significantly dilute his equity in the company, leading to the lawsuit whose depositions serve as a narrative device for the film. (Moral of the story: know what you’re signing! If you don’t, hire a lawyer! If there’s a lawyer in the room, ask him, “do you represent me?” If he says no, get your own guy! If he says yes, make him put it in writing!)
We learn that Facebook was originally formed as a Florida limited liability company and that, through legal maneuvering, another Facebook entity was created in Delaware that acquired its Florida counterpart, giving it the ability to restructure ownership. I’m not here to delve into the legal tricks that were played; other corners of the internet have already done so. Instead, I’m here to talk about something even less interesting: entity formation documents!
Formation documents (what you file with a state to create a corporation or limited liability company) are almost always available to the public. If you know the state where the entity was created, you can easily find its initial records. So, after entering “Florida entity search” into your search engine of choice, you’ll get here. With some persistence, you should be able to find information on whatever company you’re looking for, like the initial Articles of Organization of thefacebook LLC:
Maybe it’s just me, but seeing a copy of these Articles feels almost historic, and maybe a bit inspirational. Facebook is now worth hundreds of billions of dollars, but only sixteen years ago it was so green that its owners listed in a public document what look like their home addresses—no, even better, their parents’ home addresses—because they didn’t yet have an office. Mark’s address even has a typo: Dobbs Ferry is in New York, not Massachusetts. (Or, was this not a typo but rather the first of many times in which Zuckerberg would intentionally flout governmental authorities?!)
Even better is that the amended Articles of Organization are also available for viewing.
I don’t want to pull you even further into the weeds of corporate law (thanks for even making it this far!), but what I find cool here is that the amended Articles include an attachment laying out the reorganization that is signed by the man himself. Another slice of history! Think of how much impact, both positive and negative, that Facebook has had on the planet: the media industry, the outcome of the elections, the way we communicate. So much of that can be traced back to this document (and a thousand others not available for public viewing). Did Zuckerberg have any idea? Did he pause and contemplate before signing this? Did he scribble his signature without reading it, like Saverin would later do? If you squint hard enough, it can be fun to imagine the answers to these questions.It looks like the first Articles of Organization were sent to the Florida secretary of state via fax. So, after it was run through the fax machine, the original was probably put in a file cabinet by the Organizer (Business Filings Incorporated) or thrown out. I’m guessing the amended Articles of Organization were prepared by a Palo Alto law firm, signed in Palo Alto, and then faxed or emailed to a third party in Tallahassee, which filed the documents with the Florida secretary of state. I would guess that the original in Palo Alto made its way into a client file somewhere.Even I, a noted corporate records enthusiast, don’t think that these documents need or deserve the reverence afforded to the Constitution. But I do think there is value in making them public record. Every once in a while, they give a peek behind the curtain into the workings of the corporate world, which could probably benefit from some more transparency.
(PS: every state lets you access corporate records like these from the comfort of your home, though some states will require the creation of an account and/or the payment of a nominal fee to search. Just imagine what you could find!)