One of the top six reasons why small businesses fail is because there are issues with the business plan. It’s evident that if you don’t have clear direction for your company, things can fall apart quite easily.
Business plans aren’t the only things that provide clarity though. There are also corporate bylaws, which you may need for your business.
What are corporate bylaws, why are they important, and how can you draw them up for your company? Read on to find out more, as well as to find a bylaws template you can use.
What Are Bylaws?
Corporate bylaws are the internal rules and regulations that govern the operations of a corporation. Essentially, they outline how the company will be run, the roles and responsibilities of its officers and directors, and the procedures for decision-making, meetings, and resolving disputes. The equivalent for it for LLCs is the operating agreement.
An important thing to note is that bylaws are legally binding. They provide structure and ensure that your company operates smoothly while complying with both state and federal laws.
Why Are Corporate Bylaws Important?
As we’ve just said, bylaws are vital for defining roles, decision-making, and conflict resolution. However, they do much more than that.
For example, many states require corporations to have bylaws to maintain legal status. So if you don’t have one, you risk things like fines or even the shutdown of your company.
In addition, well-drafted bylaws help demonstrate that your corporation operates as a separate legal entity. This can protect you from personal liability.
Key Components of Corporate Bylaws
Now that you know what corporate bylaws are and why they’re important, you may be wondering about what the key components are. While they vary based on the specific corporation’s size and structure, they typically include the following sections.
1. Corporate name and purpose
- Official name of the corporation
- The purpose and scope of the business operations
2. Board of directors
- How many directors will be on the board?
- How directors are elected, removed, or replaced
- Roles and responsibilities of the board
- How often meetings will be held
3. Shareholders’ rights and responsibilities
- Classes of stock and voting rights
- Shareholder meeting procedures
- Rules for issuing and transferring shares
4. Corporate officers
- Positions such as CEO, CFO, and Secretary
- Duties and powers of each officer
- Process for appointing and removing officers
5. Meetings and voting procedures
- How often meetings will be held
- Quorum requirements for valid meetings
- Voting rights and procedures for board and shareholder decisions
6. Conflict of interest policy
- Rules on handling conflicts of interest among directors and officers
7. Amendment process
- How bylaws can be modified or updated
8. Record-keeping requirements
- Policies for maintaining corporate records and minutes of meetings
9. Indemnification clause
- Protection for directors and officers against liability in lawsuits related to their corporate duties
Free Corporate Bylaws Templates
Now, you may want to see a bylaws example so you know how to draft yours. In this section, we’ll give you two sample corporate bylaws templates that you can base yours on.
Otherwise, if you want a professional to handle it for you, then use our incorporation service. We can incorporate your business for free (minus state fees) and our fee for drafting corporate bylaws is only $97.
Simple Corporate Bylaws Template
CORPORATE BYLAWS
OF [Your Company Name]
ARTICLE 1 – NAME AND PURPOSE
Section 1.1. Name: The name of this corporation shall be [Your Company Name].
Section 1.2. Purpose: The corporation is formed for [describe business purpose].
ARTICLE 2 – BOARD OF DIRECTORS
Section 2.1. Number of Directors: The corporation shall have [number] directors.
Section 2.2. Election: Directors shall be elected at the annual meeting of shareholders.
Section 2.3. Responsibilities: The board shall oversee management and ensure compliance.
ARTICLE 3 – SHAREHOLDERS
Section 3.1. Meetings: The annual meeting shall be held on [date] at [location].
Section 3.2. Voting Rights: Each shareholder shall be entitled to one vote per share.
ARTICLE 4 – OFFICERS
Section 4.1. Officers: The corporation shall have a President, Treasurer, and Secretary.
Section 4.2. Duties:
– President: Acts as CEO, oversees operations.
– Treasurer: Manages financial records.
– Secretary: Keeps minutes and corporate records.
ARTICLE 5 – AMENDMENTS
Section 5.1. The bylaws may be amended by a majority vote of the board.
CERTIFICATION:
These bylaws were adopted on [date] by the Board of Directors.
Signed,
[Name]
[Title]
Comprehensive Corporate Bylaws Template (For Larger Corporations)
Corporate Bylaws of [Your Company Name]
Adopted on: [Date]
Article 1 – Name and Purpose
Section 1.1 – Name
The name of this corporation shall be [Your Company Name].
Section 1.2 – Purpose
The corporation is organized for the purpose of [describe business purpose], and shall have the authority to engage in any lawful business activity permitted under [State] corporate law.
Article 2 – Offices
Section 2.1 – Principal Office
The principal office of the corporation shall be located at [Address].
Section 2.2 – Additional Offices
The corporation may establish additional offices as determined by the Board of Directors.
Article 3 – Board of Directors
Section 3.1 – Number and Qualifications
The Board of Directors shall consist of [Number] members. Directors must be at least 18 years old.
Section 3.2 – Powers and Duties
The Board shall have full control over corporate management and policy decisions, including but not limited to:
- Approving major financial transactions.
- Hiring and removing corporate officers.
- Amending corporate bylaws.
Section 3.3 – Election and Term
Directors shall be elected by the shareholders at the annual meeting and shall serve a term of [Term Length] years.
Section 3.4 – Meetings
- Regular Meetings: The Board shall meet at least [Frequency] at a location determined by the Board.
- Special Meetings: May be called by the President or a majority of the Board with [Notice Period] advance notice.
Section 3.5 – Quorum
A quorum for Board meetings shall be [Percentage or Number] of the total directors.
Section 3.6 – Resignation and Removal
A director may resign by written notice. A director may be removed by a [Vote Requirement] of shareholders or Board members.
Article 4 – Shareholders
Section 4.1 – Meetings
- Annual Meeting: Shareholders shall meet annually on [Date] to elect directors and conduct business.
- Special Meetings: May be called by the Board or shareholders holding at least [Percentage] of outstanding shares.
Section 4.2 – Voting Rights
Each shareholder shall have one vote per share owned.
Section 4.3 – Quorum for Shareholder Meetings
A quorum shall consist of [Percentage] of outstanding shares.
Article 5 – Officers
Section 5.1 – Officer Positions
The corporation shall have the following officers:
- President (CEO) – Chief executive responsible for overall management.
- Vice President (Optional) – Assists the President and assumes duties in their absence.
- Treasurer (CFO) – Manages corporate finances.
- Secretary – Maintains corporate records and minutes.
Section 5.2 – Election and Removal
Officers shall be appointed by the Board and serve at its discretion.
Article 6 – Conflicts of Interest
Directors and officers must disclose conflicts of interest and abstain from voting on matters that present conflicts.
Article 7 – Indemnification
The corporation shall indemnify directors and officers against legal claims arising from corporate activities, except in cases of fraud or misconduct.
Article 8 – Amendments
These bylaws may be amended by a [Vote Requirement] of the Board or shareholders.
Certification:
These bylaws were adopted by the Board of Directors on [Date].
[Name]
[Title]
[Company Name]
Get Your Bylaws Template Here
Hopefully, after you’ve read this article, you have a better understanding of what corporate bylaws are. Basically, it’s a legal document that outlines how your company should be run.
We’ve also provided you with two examples so you can choose a bylaws template that works for your business. But if you need more help or would like peace of mind, speaking with a legal professional would be a good idea, or utilizing a professional incorporation service would be excellent too.
Sign up with Business Anywhere now to use our free business incorporation service. You’ll get a free year’s worth of registered agent services too.
