One of the most important aspects of forming a corporation is creating corporate bylaws. As companies grow and change, the corporate bylaws will evolve. Changing bylaws isn’t complicated, but here are some general guidelines to follow when making amendments. We’ll cover how to amend corporate bylaws in 4 simple steps.
Corporate Bylaws and Articles of Incorporation
Articles of Incorporation are the official formation documents you must file with the state to start a new business. Once those are filed, you can write the corporate bylaws, which are a set of internal rules that outline how to run day-to-day operations and the rights and responsibilities of the owners and managers. Most states require bylaws, but even if your state does not, it is good business practice to have them so that you have structures and procedures to follow.
Some of the items commonly covered in corporate bylaws include:
- The company’s purpose
- Basic details such as location of the headquarters
- The procedure for amending corporate bylaws and articles of incorporation
- The names of the officers and directors of the corporation, as well as the number of board members
- How officers and directors are selected and removed
- Record keeping and meeting procedures
- Procedure for resolving internal disputes
- How your corporation issues stock, as well as the classes of stock and number of each class
- The responsibilities of each officer
Once the corporate bylaws are written, the board will hold a vote to approve them and they become official.
4 Steps to Amending Corporate Bylaws
Changing bylaws isn’t complicated, but here are some guidelines to follow when making amendments.
Step 1: Call a Meeting
Most bylaws with amendment procedures require calling a meeting of the board of directors and holding a vote on the amendment.
Step 2: Distribute the Proposed Amendments
Distribute a copy of the proposal to all board members so they can take time to review before a vote is made. Familiarize yourself with the current requirements for amendments as stated in your current bylaws, including what voting majority is needed for the proposed amendments to be passed.
Step 3: Call a Second Meeting
During the second meeting, a vote will be held to approve or disapprove the amendments. The bylaws should state how many votes are needed, but a majority is generally the rule. If the vote is in favor of the amendments, you must provide a written resolution detailing the changes. This resolution should be prepared prior to the second meeting so that it can be given to all board members at the end of the meeting.
Step 4: Amend the Bylaws
If the amendment passes, you must then change the bylaws to reflect the new information and, if required by your state, file the amended bylaws with the appropriate state agency.
Your corporation’s bylaws are a map for how your corporation does business. It’s important to make sure that they are written clearly and updated as needed to ensure operations run smoothly.
Protect your assets and your reputation with a reliable legal team behind you. Contact DaMore Law to schedule a consultation with a dedicated business law expert.