How to Write Corporate Bylaws

Key takeaways

• You can draft effective corporate bylaws in four essential steps: Research your state's specific requirements, include all mandatory provisions, obtain proper board approval, and establish clear amendment procedures.
• Corporate bylaws differ from articles of incorporation by focusing on internal operations rather than basic formation details.
• Most states require bylaws for corporations, and they serve as legally binding documents that guide daily business decisions and governance practices.

What are corporate bylaws?

Corporate bylaws are a legal document that outlines the internal rules and procedures that govern how your corporation operates on a day-to-day basis. Unlike articles of incorporation, which provide basic information about your corporation to the state, bylaws focus on internal management and typically remain private documents. Think of them as your company's operating manual.

Corporate bylaws do the following:

• Establish procedures for directors meetings
• Define officer and director responsibilities
• Outline voting processes, such as how to elect directors
• Create the framework for how to lead, manage, and organize your company

In terms of corporate law, bylaws can serve as the bridge between state corporate law and your company's specific operational needs. They provide broad guidance on state statutes, but allow you to customize how you meet those statutes to fit your corporation's unique structure and goals. For example, while state law may require annual shareholder meetings, your bylaws specify when, where, and how these meetings occur.

Bylaws are always legally enforceable, but specific rules vary by state. While many states require corporations to adopt bylaws, they're not a requirement for incorporation in every state. 

Why are corporate bylaws important?

These documents play a crucial role from legal compliance to conflict resolution.

• Internal governance and corporate legitimacy. Bylaws create predictable processes for decision-making, which can help prevent internal disputes and demonstrate to investors, lenders, and other stakeholders that your business operates professionally and transparently.
• Limited liability. Well-structured bylaws also protect your corporation's limited liability status by showing that you maintain proper corporate formalities.
• Legal compliance. Company bylaws establish voting thresholds, meeting notice requirements, and record-keeping procedures that satisfy state requirements. This can be especially important during audits, legal proceedings, or when seeking investment or financing.
• Conflict resolution. When disagreements arise among shareholders, directors, or officers, bylaws provide clear procedures for handling disputes. This can either help to avoid costly litigation or offer a legal framework for how to rule that's based on internal guidelines rather than state laws.

What to include in your corporate bylaws

Successful bylaws should provide detailed guidance without becoming overly complex or restrictive. The content can be tailored to your company's needs, but certain provisions are essential for legal compliance and effective operation.

Required and recommended provisions

These fundamental provisions will establish the basic framework for how to govern your organization.

• Board of directors provisions form the core of most bylaws. Specify the number of directors (or a range), their qualifications, terms of office, and procedures for election and removal. Detail how board committees will call meetings, notice requirements, quorum needs, and voting procedures. Include provisions for emergency meetings and remote participation when permitted by state law.
• Officer provisions should define each officer position, their duties and authority, appointment procedures, and terms of service. Common corporate officer positions include chief financial officer, president, secretary, treasurer, and vice president. You can customize these based on your needs.
• Shareholder provisions must address meeting requirements, voting procedures, and stock transfer restrictions. Include shareholder annual meeting dates, special meeting procedures, notice requirements, and quorum thresholds. Define voting rights for different classes of stock and establish procedures for proxy voting when applicable.
• Additional recommended provisions include conflict of interest policies that require directors and officers to disclose potential conflicts, indemnification clauses protecting directors and officers from personal liability when acting in good faith, and record-keeping requirements specifying what corporate records management must maintain and how shareholders can access them.

State-specific requirements

State laws vary significantly in their bylaw requirements. Here are some examples from states where corporations are commonly formed:

• Delaware, known for its business-friendly corporate law, allows broad flexibility in bylaw content, but requires certain basic provisions.
• California takes a more prescriptive approach. The state requires specific language in certain bylaw provisions and mandates particular procedures for shareholder meetings and voting.
• New York falls somewhere between Delaware and California in its requirements. It mandates certain procedural safeguards, but allows flexibility in governance structures.

Most states require bylaws to address annual meetings, though the specific requirements vary. Some states mandate particular notice periods, while others specify minimum quorum requirements. Research your state's corporate statutes or consult with a corporate attorney to ensure compliance with local requirements.

How to draft corporate bylaws: Step-by-step

It typically takes several weeks to properly draft bylaws because it involves multiple stakeholders and requires careful consideration of how different provisions will work together in practice. While that may seem daunting, a systematic approach helps ensure you create comprehensive bylaws that serve your corporation well for years to come.

Step 1: Research state requirements and gather required information

First, thoroughly review your state's corporate statutes to understand what provisions they require. Many states offer sample bylaws through their Secretary of State websites or corporate law sections. These can serve as a template and help to ensure compliance with local requirements.

Gather your articles of incorporation and review them carefully, as bylaws must be consistent with your formation documents. Note any specific provisions in your articles that affect bylaw content, such as the number of directors, voting requirements, or special classes of stock.

Step 2: Assemble key decision-makers and brainstorm content

Identify your corporation's key stakeholders and decision-makers who should participate in the bylaw drafting process. This typically includes initial directors, major shareholders, and key officers. Consider holding an initial meeting to discuss governance preferences, operational needs, and any special circumstances that should be addressed in the bylaws.

Research industry-specific considerations that might affect your bylaw content. Some industries have particular governance requirements or best practices that relevant organizations should adopt. Professional corporations, for example, often need special provisions addressing licensing requirements and professional liability issues.

Step 3: Create an outline and draft each section

Start with a comprehensive outline that covers all required and recommended sections before writing detailed provisions. Use clear, straightforward language that can be easily understood by all stakeholders. You want your bylaws to be specific, but free of unnecessary legal jargon.

Organize sections in a way that feels logical or intuitive for your business. Many organizations begin with general provisions and move through shareholders, directors, officers, and administrative matters. Include practical details that will help your corporation operate smoothly.

For example, specify meeting locations (or procedures for determining locations), establish regular meeting schedules where appropriate, and create clear procedures for document distribution and record-keeping. Consider including provisions for electronic meetings and voting if your state laws permit it.

Step 4: Review the draft

Review draft provisions carefully for internal consistency and potential conflicts. Ensure that voting thresholds are achievable, meeting notice periods are reasonable, and officer duties are clearly defined without overlap or gaps. Consider how the bylaws will work in practice, not just whether they meet legal requirements.

Step 5: Obtain board approval and make bylaws official

Present the draft bylaws to your initial board of directors for review and discussion. Schedule adequate time for this review, as directors may want to suggest modifications or ask questions about specific provisions. Provide copies of the draft well in advance of the meeting to allow proper time to review.

Hold a formal board meeting to approve the bylaws that meet the notice and quorum requirements you drafted. Document the approval in corporate minutes and include any amendments made during the meeting and the final vote. This creates an official record of bylaw adoption that may be necessary later.

Step 6: Distribute to stakeholders and file with the state (if applicable)

Distribute final copies of the approved bylaws to all directors and officers, and ensure each person understands their responsibilities under the new governance structure. You may want to provide a summary of key provisions or hold a brief training session to familiarize everyone with the most important procedures and requirements.

Finally, file the bylaws with the appropriate state agencies, if your state law requires you to do so. While most states don't require you to file bylaws, it's best to check with your Secretary of State or consult a lawyer if you aren't sure. You want to submit any necessary documents promptly to maintain good standing.

How to use and amend your corporate bylaws

Regular review and appropriate amendments keep your bylaws current and effective as your business grows and evolves.

Operating under your bylaws

Your bylaws should be the first reference point for any governance questions or procedural decisions within your corporation.

• Consult your bylaws with any governance questions or procedural decisions. In the beginning, try to use your bylaws as your first point of reference before you schedule meetings, make officer appointments, or communicate with shareholders. This consistency helps maintain corporate formalities and protects your limited liability status.
• Establish systems to ensure bylaw compliance in routine operations. Create meeting notice templates that incorporate your bylaw requirements, develop voting procedures that match your specified thresholds, and maintain records according to your bylaw provisions. Many corporations find it helpful to create checklists or procedures manuals that reference specific bylaw sections.
• Train directors, officers, and key employees on relevant bylaw provisions that affect their roles. The corporate secretary, in particular, should be thoroughly familiar with meeting procedures, notice requirements, and record-keeping obligations. Regular training helps prevent inadvertent violations and ensures smooth corporate operations.
• Use your bylaws proactively to resolve disputes or unclear situations. When disagreements arise about procedures or authority, refer to the relevant bylaw provisions to guide resolution. This approach helps maintain objectivity and prevents personal conflicts from affecting business decisions.

Amending bylaws

Most bylaws include specific procedures for amendments, which typically require board approval and sometimes shareholder consent depending on the nature of the change.

• Review your current amendment procedures before proposing any modifications. This helps to ensure you follow the proper process. Some amendments may require special notice periods or higher voting thresholds than routine business matters.
• Document all amendments properly by creating formal amendment documents. You want to specify exactly what changes are being made, but avoid informal modifications or verbal agreements that could create confusion later. Maintain a master copy of your bylaws that incorporates all amendments, along with a record of when each change was made and approved.
• Consider the broader implications of proposed amendments before implementation. Changes to voting thresholds, officer duties, or meeting procedures can have unexpected consequences for corporate operations. Some corporations find it helpful to implement amendments on a trial basis or include sunset provisions for significant changes.

Corporate bylaws examples

While every corporation's bylaws should be tailored to its specific needs, below are some common provisions.

Voting procedure provisions

“Except as otherwise provided by law or these bylaws, all matters shall be decided by a majority of the votes cast by shareholders entitled to vote on the matter, provided a quorum is present." 

This language establishes the default voting standard while allowing for exceptions in specific circumstances.

Officer duty provisions

"The President shall be the chief executive officer of the corporation and shall have general supervision over the business and affairs of the corporation, subject to the direction of the Board of Directors."

This type of provision clearly establishes authority while maintaining board oversight.

Meeting notice requirements

"Written notice of each annual meeting shall be given to each shareholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting."

This creates clear timing requirements that satisfy most state law minimums while providing practical flexibility.

Conflict of interest provisions

"Any director having a personal interest in any contract or transaction presented to the Board for authorization shall disclose such interest and shall not vote on such matter."

This type of provision helps ensure transparent decision-making and reduces potential liability issues.

For more comprehensive examples and templates, consider consulting the following resources:

• California model bylaws
• Brooklyn Community Board bylaws
• Model bylaws for state associations

Corporate bylaws FAQs

What is the difference between bylaws and articles of incorporation?

Articles of incorporation are the basic formation documents that you file with the state. These documents establish your corporation's legal existence. They typically include basic information like your corporation's name, purpose, registered agent, and authorized shares.

Bylaws, on the other hand, are internal operating rules that govern how your corporation conducts business. They include meeting procedures, officer duties, and voting requirements. While articles of incorporation are public documents, bylaws are generally private internal documents.

Are corporate bylaws legally binding?

Yes, corporate bylaws are legally binding for the corporation, its directors, officers, and shareholders. Courts will enforce properly adopted bylaw provisions, and failure to follow bylaw procedures can result in legal consequences, including potential loss of limited liability protection. However, bylaws can't contradict state law or the corporation's articles of incorporation.

Who can amend corporate bylaws?

The authority to amend bylaws depends on your state laws and the specific provisions in your articles of incorporation and current bylaws. In most states, both the board of directors and shareholders have the power to amend bylaws, though the articles of incorporation may limit this authority. Some bylaw amendments may require only board approval, while others might need shareholder consent, particularly those that affect shareholder rights or voting procedures.

Do bylaws need to be filed with the state?

Most states don't require corporations to file their bylaws with state agencies, but some do. Bylaws are typically internal documents that remain private to the corporation. Check your specific state's regulations. Even when you don't need to file with the state, your bylaws may be requested by banks, investors, or other third parties.

Can bylaws be changed after incorporation?

Yes, bylaws can and should be amended as your corporation's needs change. Most bylaws include specific procedures for amendments, which typically require board approval and sometimes shareholder consent. The amendment process should be clearly outlined in your current bylaws, including notice requirements, voting thresholds, and documentation procedures.

Are there different requirements for nonprofit corporation bylaws?

Yes, nonprofit corporations often have additional bylaw requirements related to their tax-exempt status and charitable purposes. Nonprofit bylaws typically must include provisions about conflicts of interest, compensation policies, dissolution procedures, and compliance with IRS regulations for tax-exempt organizations. Many states also have specific requirements for nonprofit corporation governance that organizations must address in their bylaws.

Get help drafting your bylaws

Need help drafting your bylaws? LegalZoom's comprehensive corporation formation services include guidance on creating effective bylaws tailored to your business needs and state requirements. Our experienced team can help you navigate the complexities of corporate governance while helping to ensure your bylaws provide the structure and flexibility your business needs to succeed.

Brette Sember, J.D. contributed to this article.