Corporate bylaws are documents that provide a framework for the organization, operation, and structure of a company.
- Starting a new company.
- Creating a structured organizational framework for an existing company.
Companies are controlled by a system of rules, practices, and processes that are either legally mandated or described in their formative documents. Large companies involve many stakeholders, including shareholders, directors, managers, employees, customers, suppliers, financiers, and the community at large. In order to ensure that the needs of all these stakeholders are met, corporations typically organize their operations and structure as corporate bylaws.
Corporate bylaws set out the structure, manner, and procedure by which a corporation should be run. Corporate bylaws are typically drafted at the time a new company is formed. Companies can create new bylaws subject to the review and approval of their board of directors, but founders who want long-term control over the way their company is run may not want to give this degree of authority to a future board of directors.
Because they are specific to the business operations of a particular corporation, bylaws can vary greatly. However, they typically cover topics related to the purpose of the company, its initial directors or shareholders, how management decisions are made, and what officers will be necessary to carry out day-to-day business operations. Bylaws can be amended, but typically only with the support of two-thirds of the board of directors. Organizations who wish to impose additional terms or conditions on corporate bylaw amendment should do so in the bylaws themselves.
Corporate bylaws are an important part of early business development because they pave the way for certainty and stability in future operations. As a result, all companies should consider developing corporate bylaws regardless of whether they are required to do so by the laws of their jurisdiction.