What are corporate bylaws?
Corporate bylaws are the governing rules by which a company operates in compliance with local legislation. When a company is founded, the bylaws are the first thing the executive board creates. Not to be confused with the articles of incorporation - these have to be filed when registering a company and before it is established.
After being prepared by one of the executives or a committee on the executive board, the bylaws of the company have to be approved by the board. Additionally, they have to be accessible for local state and tax authorities in case they want to audit the company.
What corporate bylaws should include
General information about the corporation:
Name, address and principal place of business of the corporation; designation of the corporation as private or public(dividing the shares between a few shareholders vs. selling shares to the public); the fiscal year of the corporation. The bylaws also have to state the general purpose of the corporation.
Shareholders and meetings:
The number of shares, the voting percentages of shares and - if applicable - the class of stock shares. Should also contain information about shareholder meetings, the voting process, the notifications and whether voting by proxy is allowed or not. Annual meeting proceedings and requirements for notifying members also have to be described in the bylaws.
Number of board members, general powers and duties, term of service of board members, how many board members have to vote for something in order for it to be approved (“quorum”). Details about board meetings like frequency, location and protocol. Describes the duties, process of election and terms of office of executive officers as well as the procedure how to remove or replace a board member.
Details on the procedure of corporate record keeping including location of the records as well as rules for the preparation and inspection of the records. Procedures for amending articles of incorporation and bylaws. Rules on approval of contracts, loans, checks, stock certificates etc. Details on auditing procedures.