What You Should Include When Forming Bylaws for Your Business

Though your corporate bylaws are completely private, that does not make them any less important than any of the documents that you need to file with local or federal agencies. They serve as tools that help you navigate your company’s operations. They can help you settle internal arguments, open a corporate bank account, get underwriting from insurance companies, and in some locales are required in order to be recognized as a legal corporation.  Establishing bylaws is a fairly straightforward process, but it is important that they include certain basic provisions as well as particular issues that may apply to your organization.

The most basic elements that should be included in any corporation’s bylaws include:

  • A statement of purpose – This sets forth your reasons for forming the corporation; your customers and what you do for them; what differentiates your services or products; what differentiates you from your competitors; your goals for your business as well as your plans.
  • Members — This includes information about members’ voting rights, how new members are added, and what type of members your organization has.
  • Information on the Board of Directors – This includes how many directors; how they will be elected; what qualifies a person to be a director; how meetings will be scheduled and conducted; and voting requirements.
  • Initial directors of the organization — These officials generally only hold office for the first year, after which new directors will be appointed, though directors may be removed by members. Bylaws should also indicate how many directors are needed in order for a vote to be held and how actions are to be taken by the board.
  • Shareholders’ meetings – Details of when annual and special meetings of shareholders are to be held, how notification of such meetings will be made, and what will happen at those meetings. It is important to note that different states have different requirements of these meetings, and compliance with these requirements should be included in this.
  • Committees – To include the type of committees your organization will have, as well as how often they will meet, how they will operate and what they are authorized to do.
  • Stock — Corporations should issue stock to its shareholders prior to beginning to do business. Bylaws should explain how this process will go forward, who can receive company stock, what type of classes of stock will be issued and how stock transfers should be made.
  • Officers – This bylaw should detail how officers are to be elected and appointed, and what those officers’ responsibilities are.
  • Indemnification — Bylaws should include information on how directors and officers can be protected from liability as a result of their association with the organization.
  • Conflict of Interest — This bylaw requires directors to reveal conflicts of interest or potential conflicts of interest.
  • Amendments – This bylaw provides details on how bylaws can be changed when necessary.

If you need help forming bylaws for your business, contact our team today!