For anyone that follows financial news, they will often come across terms such as shareholders, the board of directors, and/or corporate officers. These roles all play an integral part in any successful business. In this article, we will discuss corporate bylaws, the documentation that not only defines the various roles people play in the business structure but also outlines other aspects of the corporation.
What Are Corporate Bylaws?
As mentioned in the intro to this article, corporate bylaws are the document that outlines the various roles people play within the corporation. It is the set of rules by which the corporation agrees to conduct the day to day operations.
Are They the Same as Articles of Incorporation?
No, articles of incorporation are the official documents that register the business with the government. You write the articles of incorporation at the onset of the business. On the other hand, you create corporate bylaws once you establish the business. Although bylaws will encompass the same information found in the articles of incorporation, they are created by the business for the business and do not need to be filed with the government unless it is for a non-profit.
Do All Businesses Need Bylaws?
No, most governments only require S-Corporation and C-Corporations to have corporate bylaws. Some business owners choose to have bylaws drafted for their LLC or Sole Proprietorship in preparation for the future. This is only necessary if you may want to register the company as a corporation.
What Do Bylaws Cover?
Although corporate bylaws may cover any part of the day-to-day running of the business, they need to address three things:
- Rules for Corporate Meetings
- Voting Rights and Privileges
- Roles of Corporate Officers, the Board of Directors, and Shareholders
Can They Ever Change?
Yes, you can change corporate bylaws. Since corporate law and business practices are always changing, especially with new technologies, they should also be revised to reflect these changes. This is usually done as an amendment to the bylaw, which is taken into consideration and discussed at a shareholders’ meeting. The shareholders consider the proposed amendment and then take a vote to adopt or reject the amendment. Once you adopt an amendment, it is usually codified into the bylaws and takes effect immediately.
Corporate bylaws are very complex documents that outline the day-to-day management of the business. You need to take many laws and regulations into account when writing the bylaws for your company. The attorneys at Dowd Law have years of experience in drafting bylaws and ensuring they comply with all relevant laws, regulations, and ethical corporate business practices. Contact us for a consultation.