Corporate bylaws, or company bylaws, is a legal business document that dictates how a company’s routine operations are governed. In other terms, they are the documents that serve as a manual of sorts for a company or a corporation.
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Table of Content
- Corporate Bylaws Meaning & Definition
- What Are Corporate Bylaws?
- 10 Examples of Corporate Bylaws
- Corporate Bylaws Uses, Purpose, Importance
- What’s in Corporate Bylaws? Parts?
- How to Design Corporate Bylaws
- Corporate Bylaws vs. Operating Agreement
- What’s the Difference Between Corporate Bylaws, Bylaws, and Charter?
- Corporate Bylaws Sizes
Corporate Bylaws Meaning & Definition
Corporate bylaws refer to a set of rules that govern how a company is going to be run and essentially contain the standards that should be followed by the company throughout its existence.
By writing out the procedures that the management must follow in a company, business (whether it is a small business or a large one), and an organization (such as a non-profit), the smooth and efficient running of an establishment is ensured.
What Are Corporate Bylaws?
Whenever a corporation is formed or established, the first thing that the board of directors must be to create the company’s bylaws, which is a single document that contains all the rules by which the corporation operates. These documents dictate what a company can and cannot do and also outline the procedures and the standards that the company must adhere to. This is an essential document for a company and usually includes rules concerning the management structure, meeting requirements, and so on.
10 Examples of Corporate Bylaws
California Corporate Bylaws
California corporate bylaws are a set of agreed-upon rules that companies must abide by when they register their business in the state of California. This may not be an explicit requirement according to the California Corporations Code, however, it is heavily implied that this document should still be present. The corporate bylaws of this state are not filed through the secretary of state, however, this doesn’t make them any less important as they are still essential for businesses in California.
Texas Corporate Bylaws
Texas corporate bylaws are a set of rules that are adopted and governed by a company’s board of directors that help them govern the internal affairs of a company in the state of Texas. Unlike in the state of California, where the presence of this document is only heavily implied, here, this document is mandatory for all businesses that want to register in this state. Texas law requires this document to be adopted by businesses to prove that they are legitimate, and skipping them will lead to consequences.
Florida Corporate Bylaws
Florida corporate bylaws are a document that contains a set of rules that govern a corporation’s method of operations in the state of Florida. Just like the state of Texas, this document is legally required for companies to have to adopt once they have been created and incorporated. In this state, its corporate bylaws format consists of terms governing annual meetings and issuance of stocks.
New York Corporate Bylaws
New York corporate bylaws refer to a set of rules that dictate the corporation’s operating procedures when they register in the state of New York. According to state law, this document will have to be adopted at the company’s first organizational meeting. This document is legally binding, meaning that in this state, this document can be used by companies to prove that they are a limited-liability corporation (LLC) should any trouble arise.
Pennsylvania Corporate Bylaws
Pennsylvania corporate bylaws are documents that companies will create and adopt when they get registered in the state of Pennsylvania. However, just like in the state of California, the mandatory presence of these documents is not required, only heavily implied. This is evidenced by section 1310 of Pennsylvania’s Consolidated Statue which states that an organizing meeting shall be held by companies to incorporate bylaws.
Illinois Corporate Bylaws
Companies registered in Illinois will want to adapt Illinois corporate bylaws if they want to be considered a legitimate corporation when they register here. They are legally required by the authority for companies in this state according to section 805 of Illinois Compiled Statutes 5/2.20, which states that bylaws need to be adopted by shareholders at their first shareholder meeting or by directors at their first director meeting. In this state, either the company shareholders or the company directors will prepare this document.
Ohio Corporate Bylaws
Ohio corporate bylaws are referred to by the state of Ohio as regulations. It is also known as the company’s code of regulations, and they serve the same purpose as what other states call bylaws, which outline policies for meetings, the appointment of key personnel, handling situations such as a conflict of interest, and so on. This state doesn’t explicitly state the mandatory requirement of this document, since according to Ohio Revised Code section 1701.11, the corporation’s directors may adopt this set of rules.
Georgia Corporate Bylaws
Georgia corporate bylaws are an important set of rules that companies will adopt when they incorporate or get founded and registered in the state of Georgia. This document is a legal and mandatory requirement for corporations in this state according to the Georgia code section 14-2-206 (2021) which requires the board of directors or the incorporators to adopt bylaws at their first organizational meeting. This document may contain provisions for the management of corporate affairs that do not contravene the articles of incorporation.
North Carolina Corporate Bylaws
In the state of North Carolina, the North Carolina corporate bylaws refer to a set of rules that are organized in an internal document that dictates a corporation’s policies, processes, and organizational structure. This document may not be filed with North Carolina’s business registration division, but they are still considered essential documents to have internally since there can be heavy implications if this is neglected. This is also legally required in this state, per North Carolina General Statute section 5-22-06.
Michigan Corporate Bylaws
Michigan corporate bylaws are a crucial set of regulations for companies to adopt in the state of Michigan since it establishes the rules of operation and the roles of key personnel in the corporation. They are legally necessary to form a corporation in this state according to the Michigan legislature, which states that the initial bylaws need to be adopted at the first organizational meeting following its incorporation. In addition to management regulations, this document may also cover the powers of the company shareholders.
Corporate Bylaws Uses, Purpose, Importance
Corporate bylaws refer to a document that contains a set of policies and specifies different methods that may impact a company’s operations and market performance. It mainly contains provisions regarding how its affairs are to be conducted and lists the duties and responsibilities of every member of a company. Aside from those, here are other uses of this kind of document.
Dictates the company management structure
A management structure defines how a company organizes its management hierarchy. And with the corporate bylaws created by the board of directors during a company’s inception, the management structure is then dictated. It may dictate if a company will have a simple management structure or a complex management structure.
States the purpose of the company’s existence
This document is created by the company’s board of directors as soon as a company is established, and one of its main purposes is to state the purpose of its existence. This is essential since it allows current and future personnel to know the reason why the company came into existence, as well as the objective for future growth. Additionally, it also states the corporate culture of a company which is key for attracting partners or investors.
Company bylaws may be created at the company’s inception or incorporation, but its purpose simply doesn’t stop at the beginning. As the company continues to grow, this document will prove to be important in resolving any inconsistencies or conflicts that may arise. It does so by specifying terms as to what will happen if a business partner wants to part ways, or if there is a major internal disagreement among members.
If you ask every business owner about their objectives in the near or long term, the most common answer will be to grow their company into something much more profitable and recognizable. Having a document such as a company bylaws can be critical for business owners in fulfilling this objective. This is because this document can be required when a startup opens a business bank account, the owner applies for a business loan, and so on.
Establishes meeting procedures
Company meetings are key to running a company since they focus on reviewing company activities and generating different ideas to meet different business goals. A corporate bylaws document is essential to have since it establishes the rules for scheduling and procedures of management meetings. Additionally, this document also details how the meetings are going to be held and the rules that need to be followed.
What’s in Corporate Bylaws? Parts?
Board of Directors
The first section that a corporate bylaws template needs to include is the board of directors section which specifies the details of the board such as how many years a member can stay and the number of members needed to form a quorum.
Statement of Purpose
This part of the document sets the path that a corporation or company must go and identifies why the company was formed in the first place.
This part of the corporate bylaws states the management structure and the procedure for filling a higher vacant position seamlessly.
This is the most basic part of the corporate bylaws and usually includes details such as the registered name and address and also identifies if the company is public or private.
Shareholder and board meetings
This section indicates when shareholder and board meetings should be held and how each shareholder and board meeting is to be notified.
Call for other meetings
Similar to board and shareholder meetings, this part indicates procedures on how meetings are called, scheduled, and conducted.
Contract and loan approvals
This part of the corporate bylaws sets procedures for approving contracts, loans, and any other transactions that the company may take part in.
How to Design Corporate Bylaws
1. Select a Corporate Bylaws Size
2. Identify the purpose and for which state it needs to be used
3. Pick a Corporate Bylaws Template based on your state
4. Modify the contents of the chosen template
5. Verify the document for any typographical errors
6. Finalize and download
Corporate Bylaws vs. Operating Agreement
Corporate bylaws refer to a document that serves as internal governing structures for corporations and gives a clear structure to a business that will help it run smoothly.
An operating agreement refers to a document that lays out internal LLC operating procedures and acts as a framework for the business and sets forth initial member contributions and other core operations.
What’s the Difference Between Corporate Bylaws, Bylaws, and Charter?
Corporate bylaws refer to a legally-binding document that sets forth the key rules, regulations, and operating procedures of a corporation.
Bylaws are just another different term for corporate bylaws and they are usually created during the company’s incorporation and adopted at the first organizational meeting.
A charter is also known as the Articles of incorporation and explains the reason for for-profit and a non-profit’s existence and this document also brings it into existence as a legal entity.
Corporate Bylaws Sizes
Creating a corporate bylaws template requires utmost care since this is a legally binding document and the document must be free of errors in its format. This includes adhering to the right size, for which only one size is used:
- Legal (8.5×14 inches)
How do you draft corporate bylaws?
The best way of drafting corporate bylaws is to have legal help, such as an attorney, or if you need to create one, make sure that ownership changes need to be planned first via an agreement, stocks and securities need to be registered, and obtain the necessary licenses and permits.
Why are bylaws important to a corporation?
Bylaws are important to a corporation since it makes them a legitimate corporation, states the purpose of the company’s existence, and define the corporation’s management structure.
Who prepares the bylaws of a corporation?
The people who usually prepare the bylaws of a corporation are the board of directors or the incorporator of the company.
Can corporate bylaws be amended based on company growth?
Yes, however, most bylaws with amendment procedures will require a meeting between the board of directors to be called.
Who needs corporate bylaws?
Corporations looking to be considered legitimate companies by the place they’re registered will need corporate bylaws.
What are corporate bylaws written for?
Corporate bylaws are written for a corporation’s management and employees since this document helps them run a company smoothly, efficiently, and effectively.
How to write corporate bylaws for small businesses
To write corporate bylaws for small businesses, start with the company’s general information such as the type of business, name, and so on, then explain the leadership structure of the business, and then write an article that covers your basic legal concerns.
How can I get a copy of my corporate bylaws?
To get a copy, you may request it from the state secretary for a small fee, contact the company for a copy of bylaws, or work with a business attorney.
What are the most important provisions for your corporate bylaws?
The most important provisions of corporate bylaws are the board of directors, statement of purpose, the management structure, the company information, and the procedure for calling meetings.
How violating corporate company bylaws can lead to litigation?
Litigation can happen when a violation of corporate/company bylaws is severe enough such as breach of fiduciary duty, malpractice, or abuse of authority by a director.
Why a startup needs bylaws?
Startups need bylaws since it dictates clear guidelines and procedures for internal governance, which are key to a startup’s growth.