Writing Corporate Bylaws

Every startup or new business must navigate the maze of legal and financial tasks to become a thriving company. One of those tasks is writing corporate bylaws. The bylaws dictate the operating standards and procedures the corporation will follow. It outlines what the corporation can and cannot do.

This document is often confused with the articles of incorporation. The articles of incorporation is a document filed with the state to establish the corporation. This document has basic information about the corporation. The corporate bylaws are an internal legal document that goes into much more detail. You do not have to file bylaws with the state.

This guide simplifies the process of writing corporate bylaws. Visit FindLaw’s Incorporation and Legal Structures section to learn more.

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Before Writing Your Bylaws

Before writing bylaws, you must first form a corporation with the secretary of state. First, determine the business name, ensuring it doesn’t conflict with another corporate name in the state of registration. Then you file articles of incorporation listing your business name, registered agent’s name and address, the corporate purpose, the number of shares of stock the company can issue, and the name and address of the incorporator.

Business owners should familiarize themselves with the state law for corporate formation as each state has its own specific filing requirements and filing fees. For help with forming a corporation, you can use online business formation services.

Once your corporation is established, it’s advisable to secure an employer identification number (EIN). You can use this EIN to establish a separate bank account for clear financial demarcation. This can help protect your personal assets. You will also need to get any required business licenses.

Bylaws are specifically associated with corporations. Both for-profit corporations (like C corps or S corps) and nonprofit corporations use bylaws. These bylaws detail the rules and procedures for corporate governance and operations. Other business entities, like sole proprietorships or LLCs, do not use bylaws. Instead, LLCs use an operating agreement. Partnerships use a partnership agreement to govern their operations. Let’s discuss bylaws in more depth.

Corporate Bylaws: What They Cover

Corporate bylaws delineate the framework for how a business is governed and operated. They set forth rules and procedures for making decisions. They establish the roles and responsibilities of company officers and directors while also specifying the rights and obligations of shareholders. Additionally, bylaws address meeting protocols and voting rights. The issuance and transfer of shares of stock are addressed as well.

Corporate bylaws will likely be more complex the larger the business. A typical company’s bylaws will cover and contain the following:

• The corporation’s identifying information (name, address, and principal place of business)

• Number of directors and corporate officers authorized for the corporation

• The officers of the company such as chief executive officer, president, vice-president, treasurer, and secretary, and a description of their responsibilities

• Type and number of shares and stock classes that the corporation is authorized to issue

• Procedure for meetings of the board, annual meetings, and shareholder meetings, including frequency, location, and notice of meetings

• Procedure for corporate record-keeping, including rules for preparation and inspection of records

• Procedure for filing annual reports required by the state

• Determining the company’s fiscal year

• What is considered a conflict of interest with respect to the corporation

• Procedure for amending articles of incorporation and bylaws

In essence, bylaws serve as an internal manual to guide a corporation’s daily operations. They help ensure consistency in how a company operates.

Writing the Corporate Bylaws

A new corporation’s bylaws are typically created by the person or persons who initiated the incorporation process (called the “incorporator”), or they may be written or formally adopted by the new corporation’s board of directors as one of the board’s first actions. The bylaws also should address the corporation’s primary goals and reasons for existence.

A company’s corporate bylaws typically will start off with the most general information, such as the company’s name, location, and the names of the directors and officers. There also will be a section on when and where shareholder meetings are held and perhaps a statement that the board may call meetings as needed. The bylaws also should address what constitutes a quorum for voting purposes and rules for proxies.

Finally, the day-to-day duties and responsibilities of each officer (executives such as the CEO and CFO) must be spelled out in the bylaws. The exact contents of the bylaws will vary from one corporation to the next.

No Government Filing

While you must file articles of incorporation with either the secretary of state office in your state or a similar business filing agency, corporate bylaws are not filed with any agency. They are a key part of your corporation’s business records. You may need to disclose them to potential investors, creditors, and other entities with whom your corporation does business.

Get Legal Help Writing Your Corporation’s Bylaws

Writing your new corporation’s bylaws is an important step on your organization’s path to success. If you’re going to issue stock, pay corporate taxes, or claim S corporation status, make sure to do it right the first time. To ensure that your new business covers all legal bases at all times during the incorporation process, you should consult with a small business attorney for legal advice today.