A farm corporation is a legal entity that may be established under North Dakota laws, or the laws of another state, by one or more individuals, but not to exceed fifteen shareholders. Shareholders must be related individuals or one of the following:
- A trust for the benefit of an individual or a class of individuals who are related to every shareholder of the limited liability company within specified degrees of kinship.
- An estate of a decedent who was related to every shareholder of the corporation within specified degrees of kinship.
The shareholders must be related within one of the following degrees of kinship:
- First cousin;
- Second cousin; or
- The spouse of a person so related.
A farm corporation must be engaged in farming which is defined as "cultivating land for production of agricultural crops or livestock, or the raising or producing of livestock or livestock products, or fruit or horticultural products. It does not include production of timber or forest products, nor does it include a contract whereby a processor or distributor of farm products or supplies provides grain, harvesting, or other farm services." (NDCC, Section 10-06.1-01, Subsection 1) The farm corporation may engage in alternate activities; however, the annual average of at least sixty-five percent of the corporation's gross income over the previous five years shall have been derived from farming or ranching operations. The corporation's income from nonfarm rent, nonfarm royalties, dividends, interest, and annuities cannot exceed twenty percent of the corporation's gross income.
A farm corporation is created, and otherwise operates and is treated, in the same manner as a general business corporation. However, at the time the articles of incorporation or certificate of authority is filed with the Secretary of State, the farm corporation must also provide a report disclosing the following:
- Name of the corporation
- Name and address of the registered agent in North Dakota
- With respect to each shareholder:
- Name and address of each;
- Names and addresses and relationships of trusts and estates that own shares;
- Number of shares or percentage of shares owned by each;
- Relationship of each;
- Statement whether each is a citizen or permanent resident alien of the United States;
- Statement whether each is actively engaged in operating the farm or ranch;
- Statement whether each resides on the farm or ranch; and
- Statement whether each depends principally on farming or ranching for a livelihood.
- Names and addresses of officers and directors
- Listing of the acreage (hectarage) and location listed by section, township, range, and county of all land in the state owned or leased by the corporation and used for farming or ranching.
See General Business Corporation.
A farm corporation using a trade name in the transaction of business must file a Trade Name Registration with the Secretary of State. A trade name is a name other than the corporate name.
The Trade Name Registration:
- Affords exclusive right to that name in the State of North Dakota. No other business may file a name with the Secretary of State that is the same as, or deceptively similar, to any registered name.
- Establishes a public record from which the name of the corporation using the name can be identified.