Corporate bylaws are an important component of a corporation's identity. Bylaws are similar to an organization's articles of incorporation, because both identify the operational characteristics of the company. Unlike the articles, however, bylaws are extremely detailed. They are for internal use and do not have to be filed with the state. The incorporator and the company's board of directors usually share the responsibility of creating the corporation's bylaws.
One of the first sections of corporate bylaws describes the purpose of the business. This section is important because it outlines the corporation's reason for existence and sets the foundation for how and where the company will operate. Corporate bylaws also contain identifying information about the company, including the business name and the location of the organization's home office and other corporate offices.
Another crucial area of corporate bylaws is corporate membership. Corporate structures typically consist of a board of directors, corporate officers and shareholders. The board of directors govern the organization. Bylaws often include the minimum and maximum number of directors allowed as well as rules on how vacancies will be filled. Bylaws also establish official corporate roles, such as the chief executive officer, chief operating officer and chief financial officer, because these individuals manage the day-to-day operations of the company. Shareholders have an important place in corporate bylaws as well, because they have an interest or “share” in the ownership of the organization. Depending on the size of the corporation, the company's original owners are usually the initial shareholders listed in the corporate bylaws.
Corporations must hold an initial company meeting when the business opens its doors. Federal and state laws also require that corporations hold meetings annually or more often depending on the rules in force where the business is based. Corporate bylaws specify where the meetings will take place along with other procedural requirements. The bylaws outline who must attend the meetings as well as how board members and other company officials receive meeting notifications. Bylaws also dictate how many directors must be present at the meetings to vote on critical organizational issues.
As an organization grows, bylaws may become obsolete. Antiquated bylaws may not accurately represent the organization's vision and should be updated every few years -- or more often if business needs require it. Corporate bylaws typically include an amendment section that specifies the rules for how the original bylaws can be amended as well as who can recommend and approve the amendments.
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