When creating a business, there are various requirements and actions that go into it. When forming a corporation, one of those requirements is the corporate bylaws. The bylaws are legal documents outlining the rules of corporations. They include day-to-day activities, as well as overall guidelines to keep the corporation running smoothly.
Establishing bylaws are different from articles of incorporation. Although they might be created at the same time, bylaws are kept internally while articles of incorporation are filed with the state. Typically the organization’s board of directors takes care of establishing the bylaws.
Essentially, the bylaws exist to protect the rights of all people involved in the organization. They can help you to run your business more smoothly, and to settle disputes should they arise. They are usually associated with corporations, but nonprofit organizations can also have bylaws. Clubs generally have bylaws in place as well.
When creating your company’s bylaws there are a few things that you are required to include:
Your bylaws should hold the name of the corporations, as well as the address that the main business takes place. You may also want to include other locations, along with the business’s purpose.
The board of directors for a corporation sets policies and oversees any important decisions. The bylaws should specifically mention who will serve on the board, and how many people. It should also state how long the terms will be and what is required of them. In the event you need to choose or remove members, the processes should be outlined in the bylaws to do so.
Officers are the people in charge of operating the business on a day-to-day basis. They are appointed by the directors and have individual titles. These might include:
The bylaws should explain how the officers are chosen, what they do, and how they can be removed from their position.
Shareholders are essentially the owners of the corporation because they own stock in the company. Sometimes shareholders are the officers and directors, but this is not usually the case in a large corporation. The articles of incorporation must list the number of shares issued, but bylaws can provide more information. Here you can also explain about the shares, such as whether they are voting or nonvoting, how they can be transferred, and whether or not you will issue stock certificates.
It is not required, but if your corporation will have committees, then your bylaws should identify them. You can explain the responsibilities of the committees, including how they are chosen, how long they serve, and the process of creating them.
As a corporation, you should at least meet annually. There are also often separate meetings for directors. These meetings should be outlined in the bylaws along with the procedure and timeline.
Board members are required to place the interests of the company before their own interests. In some cases, conflicts can arise if someone in the company has a stake in another company. Should you do business with this company, it would be considered a conflict of interest. Bylaws should have a specific part that states how directors need to disclose conflicts and how the corporation will handle them.
Typically the bylaws and articles of incorporation for a corporation work together but are completely separate. The articles of incorporation include details about the corporation, such as the roles of managers and stockholders. They are similar to bylaws but must be filed with the state. The bylaws are different because they need to be registered after the corporation is already formed.
Additionally, the bylaws state detailed rules and procedures that the business must follow, but the articles of incorporation include specific details of the corporation. Additionally, the articles of incorporation must be approved by the state. They become a public document upon filing, but the difference with the bylaws is that they are not publicly accessible. Articles of incorporation can only be changed should the corporation hold a shareholders meeting, but with the bylaws, you have the freedom to change them at any time.
Drafting your company bylaws should not be an extremely difficult process, but it should be done with care. You need to ensure that you meet all your state’s requirements and standards, which means you may want to use the help of an attorney.
The first step includes drafting your bylaws. Be sure to go along with the specifics that Delaware has in terms of structure and content. The next step involves preparing a packet that holds all of your incorporation documents. You will need to check on filing fees, but these typically are not required for bylaws. Finally, you can send this packet to the secretary of state’s office. Be sure to obtain the state seal of approval, along with copies as proof of filing the articles of incorporation and bylaws.