From small businesses to corporations, nonprofit and private entities, organizations need something strong enough to help them run their operations properly and carry out their mission and vision. They need governance and a solid organization by which they would base the service they give to clients, shareholders, and beneficiaries.
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Nevertheless, every time someone brings up the subject of having, updating, amending, or communicating the constitution and bylaws, it’s mostly met with a lack of response, a few nods, and reactions here and there that would leave you feeling frustrated, never mind being sorry that you didn’t prioritize it as a main topic of discussion during recent meetings. You may also see legal agreement templates.
Wells Fargo Governance Bylaws
Plant-Based Foods Association Corporate Bylaws
Pfizer Incorporated Bylaws
Corporations and Bylaws
Most corporations and foundations share causes with have their own set of rules, processes, and guidelines to which they need to abide by and serve as a point of reference for important decisions, especially those that need a motion. Bylaws are always easily forgotten after appointment and swearing in of new members, treating is as a document lacking relevance to how a business, beginning to grow and aiming for the stars, should be run when it actually should be the exact opposite. You may also see legal agreements.
Maybe even your own board of directors has no idea what the provisions say anymore. You on the other hand, as the rest of your team, can’t remember when they were last amended. Although this isn’t the case with all corporations, especially large ones, you can’t deny that the constitution and bylaws have a way of being put on the back burner when no one with a higher authority enforces their communication throughout the board and the rest of the corporation. For other companies who understand the role of the bylaws in shaping the path for success beyond that of a small business, it’s what helps manage their incorporation.
What are Bylaws?
Bylaws defined, also spelled as “by-laws,” are the rules set in a corporation. One of the priorities of the board of directors should be the establishment of the bylaws during the incorporation so that they can have documented rules for controlling the future internal affairs of what would become a corporation. You may also see legal notice templates.
Ideally, the bylaws would include the definition of all the things to consider that an organization exists and are capable of committing to the practices and values they are known form as well as perform according to their mission. They also define and state the powers and the rights of shareholders and they would usually have the following provisions, even though the contents may differ or vary among corporations. You may also see legal statement templates.
- Official Name;
- Requirements for Membership;
- The time and place for meetings of officers, board of directors, members and shareholders;
- The number of directors, their tenure, and their qualifications;
- Grounds for Termination of Members, Officers, etc;
- Sanctions for Violations;
- Positions filled and compensation of the corporate officers;
- The fiscal year of the corporation;
- Responsibilities and the process through which the bylaws should be amended;
- Process or rules on the approval of contracts, loans, checks, and stock certificates;
- Inspection of the corporate records book;
A corporation, on the other hand, is “a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan, and borrow money, sue and be sued, hire employees, own assets and pay taxes.” You may also see legal notice templates.
Importance of Corporate Bylaws
The constitution and bylaws are necessary for running a corporation and helps its leaders perform according to their responsibilities to fulfill their roles and plays a crucial part in mapping out the purpose of the corporation and the manner by which it should deal with its day to day operations especially when it just had transitioned from being a company into a corporation. You may also see legal contracts.
1. It’s your manual for internal affairs
It serves as the legal stronghold of the business where it can face the court from certain violations of rules and provisions and the existing bylaws. They are one, if not the most important set of documents to have in place since they define the structure of its internal management and how it’s supposed to be governed, meaning your corporate bylaws serves as the internal affairs guidebook for a corporation. You may also see legal memo templates.
While other articles of business incorporation are made public and are required to be filed with the secretary of state, the bylaws of your corporation are considered private and don’t have to be filed with the state or any other entity of the government. But even though it isn’t necessary for you to submit a copy of a ratified bylaws to the state, your corporation would still not exist legally until the board of directors has formally taken the steps to adopt the bylaws ow has made t known how the company should be managed and run. You may also see lawyer resume templates.
Corporate bylaws that are written and constructed well can help a corporation function for the bet, achieve its goals and help it grow bigger through:
1. adopting procedures that are tailored-fit to its needs, and
2. establishment of a process in resolving disputes.
2. It allows you to tailor-fit your rules to what your business needs
Without the establishment of bylaws or a proper set of rules in place, the state authorities, as mandated by law, will have to provide default and uniformed rules by which your corporations should perform and be operated. You can expect them to include some mandatory provisions that you have no way of amending, some will be optional and others can be changed according to what you think should be there instead. It would be better to form your own bylaws as they provide an opportunity to customize some of the rules set in a way that would answer to your company’s needs. You may also see legal cover letters.
General Motors Bylaws
3. It helps resolve disputes
Corporate bylaws are also effective in resolving disputes within a corporation before they blow out of proportion when tension run high and passions are fueling conflicts. In the lack or absence of proper process and guidelines to deal with issues that could legally and financially run a corporation to the brink of harmful litigation. Remember that even a dispute between just two people who hold certain positions that are both vital to the management have a dispute that they find hard to settle can affect the entire organization and the consequences may have some real, lasting damages to everybody. Having a good setup of bylaws can make the situation better since it enforces the settlement of disputes in an amicable, professional manner and deal with it before tempers take control and your company is dragged in court. You may also see legal invoice templates.
In most states, building a corporation is fairly made easy, with an almost no fuss process because they provide forms and paperwork for almost everything usually, except perhaps a form for bylaws. Still, the format of your bylaws isn’t nearly as important as ensuring that it properly addresses internal issues. You may also see sample legal resume templates.
4. It’s required sometimes
Additionally, if you and the board agree to open a corporate bank account, most banks typically require a copy of your corporate bylaws submitted. Furthermore, the company’s insurance provider may also ask your corporation to provide them a copy of the bylaws before they begin to underwrite certain insurance policies your business needs. You may also see sample land contract forms.
It goes without saying, that your corporate bylaws will indeed be the document that holds the biggest weight in your corporate record book, unless you’re an independent shareholder which would mean that you’d have to treat your bylaws and create them to be straightforward since you won’t have to worry about dealing with disputes. Then again, if there two or more shareholders or members, it will need to be more detailed, complex, including quite a number of necessary provisions. You may also see simple business form templates.
5. It’s necessary for business growth
Every small and medium-sized business aims to grow into a corporation, enterprises, anything that can take them higher and gain massive recognition to promote their brand, become among those who are in the pecking order and enjoy a level-playing field with the toughest of competitors. Incorporation may just be the beginning towards the establishment of a corporate enterprise but it is a large step, and the roadmap to take you to greater heights is your corporate bylaws. You may also see form templates.
They may just be documents to others who don’t understand their significance but having organized and well-defined rules or guidelines set to govern the affairs of your business and set the establishment of your corporate identity should be a top priority and an important step in the initial process of your incorporation. Having bylaws to trust when trouble calls will help you take care of your place in the company, in the best position that the corporate ladder has to offer.
Freddie Mac Bylaws
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Del Friscos Restaurant Group Inc. Bylaws
By incorporating your business, it then becomes a separate legal entity altogether, and is often considered as a good step in the growth and success of a business, especially if you have every intention of expanding and extending the company’s footprint into something that would be more than just a simple business.
Every businessman with a conviction to reach the top of the corporate status would reach such a point, and incorporation then becomes necessary. But it isn’t enough. In order to retain your corporate status, corporate bylaws should be in place to assist and support your decision-making and meeting and maintaining corporate standards. You may also see last will and testament templates.