Bylaws display specific information about a corporation. They are one of the most important documents that a corporation must have. When you are creating a corporation, a partnership, or even an association, you will want experienced attorneys to aid you in drafting such a document to ensure that your business is legally sound and protected. Bylaws are different for each corporation. Thus, explore our recommended pieces of information that must go into such a document below:
What are ByLaws?
Bylaws outline the operation of your business. In other words, if there are any rules you want for your corporation in particular, they must go in your bylaws.
Do you want to set rules for how your Board of Directors should operate? Put it in your bylaws. How many officers and executives do you want in your corporation? Put it in your bylaws. How do you want such positions to be elected? Put it in your bylaws. What about something as simple as the corporation’s name? Put it in your bylaws. You get the idea.
However, do not confuse this with a corporation’s Articles of Incorporation. This document is much different. Bylaws outline the rules of a corporation, whereas the Articles of Incorporation display the basic anatomy and inception of the company. Therefore, generally, Articles of Incorporation include names of the directors, the number of shares available, and even the location of the corporation. Accordingly, if you are looking to create a document to portray the operation of your business, and not the mere inception of the business, look no further than the corporate bylaws.
In addition, a corporation’s Articles of Incorporation, otherwise known as a charter, differ from its bylaws based on how they can be amended. To amend the charter, you have to comply with the state law of where you filed your charter. In some states, for instance, you’ll be required to hold a shareholder meeting to make the changes. Unlike the charter, corporate directors have much more freedom to amend the bylaws. In fact, rarely is a formal shareholder vote required. Therefore, ordinarily, you will want to explicitly state your amendment process in the bylaws themselves.
Accordingly, some of the information we display below that should be included in the bylaws, could also be included in an Articles of Incorporation or even a Certificate of Insurance. However, based on key differences such as the one displayed above, it may make more sense for you to put certain information in your bylaws.
Various Pieces of Information in a Organization’s ByLaws: (not limited to these)
- Name of the business. This is one of the more obvious pieces of information that are vital for your bylaws. What is the name of your business and who is responsible for creating it? As a quick side note, while this does go in the bylaws, it more importantly should be in your Certificate of Insurance. This document actually determines the name of your business and is the mechanism for potentially changing your name.
- Location. Your location is another obvious piece of information that is placed in the bylaws. However, keep in mind, location is more important for your Articles of Incorporation because those are directly filed with the state of which you are operating in.
- Purpose. Here, you will want to answer the question, “what end goal am I serving with the creation of this business?” (This also appears in the Certification of Insurance as well)
- Board of Directors. Now comes the more dense parts of your Corporate ByLaws. In this section, you are referring to the group of people that govern your organization. Therefore, you will want to include information on how a Director is selected, how many directors your board will encompass, how empty board seats are filled, specific duties of directors, any relevant qualifications needed to be a director, payment of a director if any, and how long they may serve for.
- Board of Director Meetings. On top of the prior section, include the details of how you want the Board of Director’s meetings to operate. How many times should they meet annually? Furthermore, this section should also establish how many votes are needed when the Board votes on various decisions to be made. Generally, majority rules. However some corporations elect to increase the amount of votes needed in order to decide an issue, with utmost unison.
- Amendments. Finally, end your bylaws with a section on how an amendment of the bylaws will operate. Keep in mind, that bylaws should be amended every so often in order to keep them up to date.
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