Corporate Bylaws Information
Alternate Names:
Corporate Bylaws are also known as:
- Company Bylaws
- Business Bylaws
What are Corporate Bylaws?
Corporate Bylaws are a set of written rules used by a corporation to organize its internal management. Company bylaws also outline the policies and responsibilities for the shareholders, directors, and officers of a corporation.
Who needs Corporate Bylaws?
Corporations need Corporate Bylaws to structure their organizations. When a company is incorporated, Corporate Bylaws are created and used to set out:
- Rules for meetings
- Voting rights
- The powers and responsibilities of shareholders, directors, and officers of the corporation
What are some of the terms in Corporate Bylaws?
When you are filling out your Corporate Bylaws, you may need to know the following terms:
- Special Meeting: an interim meeting set up by shareholders or directors used to make decisions that cannot wait until the next scheduled, annual meeting; whether the meeting involves shareholders or directors depends on the type of decisions that need to be made
- Quorum: the minimum number of shares, based on the number of shares owned by the shareholders who are in attendance (or their proxies), that must be present at a meeting in order to make decisions and transact business
- Remote Communication: when meetings are held by phone or video conferencing (or when one or more members attend a meeting by phone or video conferencing)
- Voting Trusts: when a shareholder appoints a trustee to hold their shares and vote according to a voting trust agreement
- Cumulative Voting: a system of voting where each shareholder gets to vote based on the number of shares they own multiplied by the number of directors all the shareholders have the ability to vote for; this voting method benefits minority shareholders because it gives them the opportunity to focus their votes as a group to make changes, such as to elect one particular director
Which decisions should be considered in Corporate Bylaws?
There are a number of decisions that should be included in a company's Corporate Bylaws, such as:
- Notice for special meetings: the amount of notice needed to call a special meeting, if notice is required
- Remote meetings: whether or not remote communication can be used in meetings with directors or shareholders
- Voting: what percentage of votes would constitute a quorum, if shareholders can form voting trusts, and if cumulative voting is allowed
- Company management structure: if the company will have a simple structure (consisting of a president, treasurer, and secretary) or a complex management structure (containing a CEO, CFO, COO, presidents, and vice-presidents)
Corporate Bylaws are also used to decide the number of directors the corporation will have, who is eligible to appoint officers, and whether or not the corporation can lend money to its officers, directors, or employees.
When do Corporate Bylaws come into effect?
Usually, the directors of a corporation formally adopt Corporate Bylaws at the first Directors' Organizational Meeting.
After the bylaws are formed and agreed to at the first meeting, the rules and procedures included in the company bylaws will come into effect (i.e. will start being used) and will guide the company's internal management thereafter until the company agrees to change its Corporate Bylaws using a Directors' Resolution or Shareholders' Resolution.
Can Corporate Bylaws be amended?
Yes, Corporate Bylaws may need to be amended from time to time. Corporate regulations and laws occasionally change, as do the business needs of the corporation. It's important to update your Corporate Bylaws to reflect these changes.
Usually, shareholders and directors must vote to pass bylaw amendments. After an amendment has been agreed to in writing (using a resolution), it is adopted by the directors and integrated into the Corporate Bylaws.
What is the difference between Articles of Incorporation and Corporate Bylaws?
Articles of Incorporation are legal papers that are filed with the Secretary of State in order for a business to be registered as a corporation.
Corporate Bylaws are internal policies that lay out the day-to-day rules and operating procedures for a corporation after it has been formed. Company bylaws do not need to be filed with the state.
Related Documents:
Frequently Asked Questions:
Corporate Bylaws FAQ