Bylaws

Although bylaws are important and most serious corporations are expected to have corporation bylaws, are corporate bylaws necessary?

Corporate bylaws as legal documents

It is also fairly common for a bank, a creditor, or the IRS to ask to see a copy. Even the smallest one-person business corporation absolutely needs to adopt corporate bylaws, if for no other reason than to look legitimate to the outside world. Although corporation bylaws are important, they have limited legal significance.

Business Corporation Act

Corporate bylaws provide many key details for day-to-day corporate housekeeping, the real source of legal authority of a corporation and the place you should look whenever you want to make sure your corporation is acting lawfully is your state ’s Business Corporation Act.

Many corporations, particularly those formed with the help of a lawyer, adopt lengthy bylaws that go on for pages repeating the provisions of the state Business Corporation Act (BCA). Having a long list of of statutory rules repeated in the bylaws may look impressive, but it is counterproductive. One reasons why bylaws should not be mixed with the state Business Corporation Act (BCA) is that your state BCA will change frequently, meaning the more of it you restate in your bylaws, the more often you’ll need to update them or pay a lawyer to do it.

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