[VIDEO] Start-Ups 101 - All About the Bylaws

What is the difference between Articles of Incorporation and bylaws?

Articles of Incorporation create the legal entity for a corporation. The bylaws define the corporation’s purpose. Articles of Incorporation contain very general information, while bylaws have specific rules and regulations of the business. Bylaws explain the roles and responsibilities of the people who manage the corporation and set rules for the general operation of the company. A corporation’s bylaws also establish shareholder ownership rights. The corporate bylaws establish a structure for the company to ensure that all divisions of the company operate smoothly.

Where are bylaws filed?

A corporation is not required to file a copy of its bylaws. The bylaws are an internal document that provides a guide for the daily operations of the company and the management of the company. However, many states require that corporations adopt bylaws, even if the bylaws are not required to be filed with the state.

Can a corporation change its bylaws?

There should be a procedure for amending the corporate bylaws included in the original bylaws. Every company expands and grows, which often requires amending the original operating rules. The best way to make sure that a company can function in the future is to make sure the bylaws can be amended to fit the company’s current needs.

Who Writes The Corporate Bylaws For A Company?

Typically, the owners of the company or the incorporators who filed the Articles of Incorporation develop the corporate bylaws. The owners appoint directions, who in turn adopt the bylaws at the first meeting of the Board of Directors. The Board of Directors then appoints corporate officers who will operate the corporation according to the corporate bylaws.

What must be included in corporate bylaws?

Because corporations are unique, bylaws are also unique. The bylaws are tailored to fit the company. However, some of the basic components included in most corporate bylaws are:

·      Name, purposes, and corporate office location

·      Principal place of business

·      Board of Directors

·      Officers

·      Direction, Officer, and Shareholder Meetings

·      Corporate recordkeeping

·      Shareholders

·      Amending bylaws

·      Conflicts of interest

Do nonprofit corporations need bylaws?

Yes, nonprofit corporations should have bylaws. All corporations, including C Corporations and S Corporations, should have formal, adopted corporate bylaws.

What is the difference between bylaws and operating agreements?

Corporations use bylaws to define the daily operations of the company. Limited Liability Companies (LLCs) use operating agreements for the same purpose. The documents are similar but have different names and contain slightly different information specific to the legal entity created.

Does a corporation need an attorney to draft bylaws?

No, there is not a legal requirement to retain an attorney to write a corporation’s bylaws. However, because bylaws are a legally binding document, it can be wise to consult an attorney to ensure the bylaws comply with state laws. Consulting an attorney can help avoid legal problems because the bylaws are vague, inadequate, or otherwise incorrect.