The bylaws are the regulations of a corporation. They contain the basic rules for the conduct of the corporation’s business and affairs. The bylaws may contain any provision for managing the business and regulating the corporation’s affairs that is not inconsistent with statutory law or the corporation’s Articles of Incorporation.
The bylaws generally cover the areas of the corporation’s internal management. Typical bylaw provisions concern the location of offices, the formalities concerning the holding of shareholders’ and directors’ meetings (i.e., date, place, and notice), the voting entitlement of shares, the powers, duties, and qualifications of directors and officers, provisions for appointing directors’ committees, etc.
Bylaw provisions often follow the language of the statutory provisions. However, the bylaws—like the Articles of Incorporation—may also be used to vary certain statutory default provisions. This situation may arise, for example, in connection with shareholders’ and directors’ meetings, where the corporation may want to alter the statutory quorum or voting requirements.
The initial bylaws are adopted at the organizational meeting held after the Articles of Incorporation are filed. The bylaws may be amended thereafter by the shareholders or, in some cases, by the board of directors.
The organizational meetings are held after the Articles of Incorporation are filed, in order to complete the organization of the corporation. If initial directors were not named in the articles, the incorporators will hold an incorporators’ meeting to elect the directors. In some states they also adopt the bylaws. The usual practice is to hold a “paper meeting” or sign a statement of the sole incorporator setting forth the action taken. The minutes or statement is filed in the corporation’s minutes book.
The directors complete the organization by holding what is usually called “the first meeting of directors.” At their organizational meeting, the directors will adopt the bylaws (unless they have been adopted by the incorporators), elect officers, accept subscriptions for and issue stock, and generally take all other actions required to complete the organization.