Bylaws

What are bylaws?

Bylaws are a basic corporate management document that should always be prepared as part of the incorporation process. A corporation should always have corporate bylaws even though in most states no law specifically requires you to adopt corporation bylaws.

Why are bylaws important?

Corporate bylaws are important because they let directors, officers, and shareholders know when and how meetings can be held, or, in the absence of meetings, how decisions can be reached and recorded by mutual written consent. In addition, corporate bylaws cover many other essential operating rules, such as:

• notice, quorum, and voting requirements for meetings;
• the basic titles and responsibilities of corporate officers;
• rights of directors and shareholders to inspect corporate records; and
• the requirements for providing annual financial information to shareholders.

Who should have bylaws?

When dealing with the outside world, any corporations are expected to have corporate bylaws. Adopting corporation bylaws also shows that your corporation takes its corporate identity seriously. It is a simple fact that shareholders, other businesses, banks, creditors, the IRS, and a court (should your corporation become involved in a lawsuit) will expect your corporation to have bylaws.

Click here to see an example of the use of corporate bylaws

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