Why Corporate Bylaws are Helpful for Your Business
If you’re in any type of business, there are a few things you need to consider. We’ve already pointed out the importance of setting up the right type of business entity. However, as any experienced business lawyer can tell you, there are other considerations. In many cases, this could include the creation of corporate bylaws.
Meanwhile, keep one thing in mind. You might feel secure that your company has a set of bylaws already in place. When were they written? More often than not, corporate by-laws are created during the inception of a business. As your company expands, it’s a good idea to make sure your bylaws are reviewed for possible updates. This could be simple as amending their current form.
The Purpose of Corporate Bylaws
Does every company need bylaws? Admittedly, the answer is no. If you look at the dictionary definition, you’ll see that bylaws apply to associations and corporations. For example, a community that has a set of rules most likely has bylaws in place for their homeowners’ association.
According to the Texas Secretary of State’s office, corporations are not required to file bylaws with the state. In fact, for closed corporations, companies are permitted to operate under shareholder agreements.
An experienced business lawyer can help you determine if it’s necessary to create bylaws. Again, it depends on the structure of your company. Consequentially, a business that has formed as a limited liability company (LLC) will need an operating agreement instead of bylaws.
No doubt you can guess that bylaws are intended to encompass a broad approach to the business operation. Ideally, every situation will be anticipated and addressed. Here are some of the important items covered in most corporate bylaws:
- Company name and principal place of business
- Names of officers
- Specifications regarding number of board of directors
- Directives concerning timing of board meetings
- Shareholder information and meeting schedule
- Establishment of committees within the corporation
- Information regarding conflicts of interest
- Procedure for amending bylaws
Without question, the real purpose of corporate bylaws is to put rules in place that management can use to run the company. This document is different than an employee manual and should be reviewed with an attorney to avoid prospective legal issues.
When You Need a Business Lawyer
Corporate bylaws may be necessary when it comes to running a company or association. At Manfred Sternberg and Associates, we have helped a multitude of businesses with determining their business entity and creating the appropriate documents to protect them. Have questions? We are more than happy to assist you. Contact us to schedule an appointment.