Guide to Writing Corporate Bylaws

Starting a corporation involves more than just filing the necessary paperwork. It also requires establishing rules and guidelines that govern the internal operations of the company. Corporate bylaws play a crucial role in this process, and most states require corporations to have them. 

In this guide, we’ll explain what corporate bylaws are, who writes them, how they are adopted, and what to include in your bylaws. By the end, you’ll have the knowledge you need to create effective bylaws for your corporation.

What are corporate bylaws?

Corporate bylaws are a set of rules and regulations that outline how a corporation will operate. They define the internal structure, roles, and responsibilities of directors, officers, and shareholders.

It’s important to note that corporate bylaws differ from the Articles of Incorporation and a shareholder’s agreement. While the Articles of Incorporation establish the corporation as a legal entity and the shareholder’s agreement deals with the rights and obligations of shareholders, the bylaws focus on the corporation’s internal affairs.

Who writes the corporate bylaws?

The task of writing corporate bylaws typically falls to the incorporator or the board of directors. The incorporator is the person or entity responsible for initiating the corporation’s formation. If the board of directors has been appointed, they play a key role in creating and adopting the bylaws. The bylaws should align with the corporation’s goals and comply with relevant laws and regulations.

How are the bylaws adopted?

The board of directors adopts the corporate bylaws during their first board meeting. It’s crucial to document this adoption process in the meeting minutes. By following the correct procedures and obtaining necessary approvals, the bylaws become official and binding for the corporation.

What do I include in my corporate bylaws?

When writing your corporate bylaws, it’s important to include certain key elements. This isn’t necessarily an exhaustive list, of course; different corporations have different needs. But these are some of the most common aspects to include.

• Legal Corporation Name: Clearly state the corporation’s legal name as it appears in the Articles of Incorporation.
• Corporation Address and Basic Information: Provide the official address and principal place of business of the corporation.
• Statement of Purpose: Define the corporation’s purpose, which should be broad enough to encompass its intended activities.
• Number of Directors and Corporate Officers: Specify the number of directors and outline the roles and responsibilities of corporate officers.
• Officer Responsibilities: Clearly define the duties and powers of officers such as the CEO, CFO, and Secretary.
• Number and Type of Shares and Stock Classes: Describe the types of shares the corporation can issue and the rights and privileges attached to each class.
• How Stocks Are Issued: Outline the process for issuing shares, including any restrictions or requirements.
• Director Meeting Procedures and Times: Establish guidelines for conducting board meetings, including notice requirements and voting procedures.
• Shareholder Meeting Procedures and Times: Specify the procedures for calling and conducting shareholder meetings, including voting rights and quorum requirements.
• How Directors and Officers Are Appointed: Detail the process for appointing directors and officers, including any qualifications or prerequisites.
• Committees: If applicable, outline the creation, composition, and responsibilities of any committees established by the board.
• Indemnification: Address the corporation’s policy on indemnifying directors, officers, and employees against legal actions.
• Quorum Requirements: Define the minimum number of directors or shareholders required for a meeting to be valid.
• Voting Proxy Rules: Establish guidelines for proxy voting, allowing shareholders to vote by proxy if unable to attend a meeting.
• How to Resolve Internal Disputes: Provide a mechanism for resolving internal disputes, such as mediation or arbitration.
• Conflicts of Interest: Set forth rules and procedures to address conflicts of interest among directors, officers, and shareholders.
• How to Amend Bylaws: Specify the procedure for amending the bylaws, including required approvals and documentation.

Every business has its own unique needs, so if you need to add or subtract from this list, you can. Just be sure that your bylaws adhere to your state’s requirements, and you’ll be set. And if you need help, check out our favorite bylaws services.