The bylaws of a corporation determine the regulations and rules that affect how a corporation functions. This legal document is made so that a corporation runs the way it is intended and to its full potential. Moreover, these can differ from state to state. Typically, the bylaws of a corporation are drawn up when the corporation is created. However, these legal documents are not public files. With that said, here is your guide to understanding the bylaws of a corporation and what they include.
First off, the bylaws include basic identifying information about the corporation. This includes the name, where their office is located, and where they primarily operate their business. Moreover, it also includes their fiscal year and determines whether the company is a public or private corporation.
Statement of Purpose
Next, corporate bylaws include their statement of purpose. Essentially, this gets right to the core of the corporation. Why was it founded? Who are their customers, and how do they meet their needs? Stating their purpose is valuable for future business partners, managers, and investors to determine if they are the right fit.
Board Of Directors & Officers
The next section must include information regarding their board of directors and officers. The board of directors oversees and governs the activities of the organization. This section states the number of directors, their qualifications, their duties, how long their terms are, and how they handle vacancies. Officers facilitate the day-to-day functions of the corporation. This section states the chief executive officer (CEO), chief operations officer (COO), and chief financial officer (CFO).
The bylaws of a corporation also state when shareholder meetings are held, what their requirements are, and how the meetings themselves function.
Protection Against Threats
When a corporation is faced with threats such as hostile takeovers, they need a plan of protection. The bylaws of a corporation state its strategies and defenses when such threats occur.
Conflict Of Interest
If conflicts of interest occur within the company, the corporation needs to address how these conflicts are settled. The bylaws of a corporation state these regulations.
Finally, a corporation and its bylaws may change over time. When amendments are needed, there needs to be regulation on how it’s handled. The bylaws of a corporation determine how amendments are handled as well.
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