Corporate Bylaws Information
What is Corporate Bylaws?
Corporate Bylaws, also known as Bylaws or Company Bylaws, is a document used by a corporation to organize its internal management by setting out the rules and responsibilities for shareholders, directors, and officers.
Who Needs Corporate Bylaws?
Corporations need Corporate Bylaws to structure their organizations. The document is created by incorporators, who set out rules for meetings, specify voting rights, and appoint each individual's powers and responsibilities.
Corporate Bylaws Definitions
The following definitions can help you when you are filling out your Company Bylaws document:
- Special Meeting: a meeting that is used to make decisions that cannot wait until the next scheduled meeting.
- Quorum: the minimum number of shares that must be present at a meeting in order to make decisions and transact business.
- Voting Trusts: when a shareholder appoints a trustee to hold their shares and vote according to the trust agreement.
- Cumulative Voting: a system of voting where each shareholder gets one vote per share multiplied by the number of directors the shareholders are electing.
- Remote Communication: when meetings are held through telecommunication, such as video or phone.
Decisions to Make in Your Corporate Bylaws
There are a number of decisions that should be included in the Corporate Bylaws for the shareholders, directors, and officers. Some of the content in a Company Bylaws may include:
- Notice for Special Meetings: If there is a certain amount of notice needed to call a special meeting.
- Remote Meetings: If meetings are allowed to be held through remote communication.
- Voting: the percentage of votes to constitute a quorum, if shareholders can form voting trusts, and if cumulative voting is allowed.
- Company Management Structure: If there will be a simple structure (consisting of a president, treasurer, and secretary) or a complex management structure (containing a CEO, CFO, COO, presidents, and vice-presidents).
- Number of directors
- If the corporation can lend money to its officers, directors, or employees
- Who appoints the officers
When do Corporate Bylaws Come Into Effect?
Usually, the directors formally adopt the Bylaws at the first Directors' Meeting. The rules and procedures included in the Bylaws will guide the company's internal management throughout its existence until the Bylaws require changes.
Can Bylaws be Amended?
Yes, Corporate Bylaws may need to be amended from time to time. Corporate regulations and laws change frequently, as do the business needs of the individual corporations. It's important to update the bylaws to reflect these changes.
Usually, shareholders and directors must vote to pass the amendments. After an amendment has been agreed to in writing, it comes into effect when it is adopted by the directors and integrated into the Bylaws.
Articles of Incorporation vs. Corporate Bylaws
Articles of Incorporation is the document that is filed with the Secretary of State in order for the business to be registered as a corporation.
Corporate Bylaws is an internal document that lays out the day-to-day rules and operating procedures for a corporation after it has been formed. Bylaws do not need to be filed with the state.