The Function of Bylaws in Defining Corporate Operations

 

Dyan Gershman is a New York City corporate attorney who provides counsel in diverse commercial matters, from contracts to mergers and acquisitions. Among Dyan Gershman’s areas of knowledge as head of Gershman Law, PLLC, is corporate bylaws and the provisions they set out.

Bylaws are a comprehensive set of rules that are adopted by the board of a corporation after incorporation to govern the internal management and operations of the company. These rules differ from articles of incorporation, which are filed with the state government, in that they are private and intended for internal use. It is important to note that no corporation can legally exist without the adoption of bylaws.

Bylaws typically include provisions on the composition of the board of directors, the structure of shareholder and board meetings, and the duties of officers. They may also outline the company's purpose, business plan, industry, products or services, and target markets. A provision on membership may define the voting rights and procedures of stakeholders in the company. Other common elements of bylaws include provisions on the composition and function of audit, research, executive, finance, and ethics committees.

Maintaining well-drafted bylaws is essential for the legitimacy of a business and can serve as evidence of compliance with proper corporate rules in the event of lawsuits or audit