Bylaws outline the rights and responsibilities of owners and officers of a corporation, supplying critical rules that govern both the day-to-day operations of the corporation as well as procedures for special situations. Most states (all but 15) require corporations to maintain bylaws, so if you are considering forming a S- or C-corporation, you will most likely need to draft bylaws. Priori is committed to helping you find the right lawyer in our curated marketplace to craft this critical document for your company.
Bylaws contain similar provisions to other kinds of partnership agreements (like an operating agreement for an LLC) but also contain organizational details and proscriptions specific to the corporate form. Importantly, many states provide default rules for corporations, while simultaneously permitting corporations to override those state-supplied default rules by explicitly providing otherwise in the corporation’s bylaws. For example, in Delaware, a corporation may choose in its bylaws to specify the number of voting shareholders required to be represented at a shareholders meeting in order to constitute a quorum. If a company’s bylaws do not specify a number, Delaware sets the quorum at one-third of voting shareholders of the corporation.
Key topics generally covered in corporate bylaws include:
Identifying information (e.g., name, purpose and location)
Number and type of shares and stock classes
Number and responsibilities of the Board of Directors
Committees of the Board of Directors
Process for appointing, removing and replacing directors
Titles of corporate officers
Process for appointing, removing and replacing officers
Procedural requirements for voting, including process for amending bylaws
Conflict of interest provisions
Indemnification of directors and officers
If you have already incorporated your business or are about to, a lawyer can assist you by drafting corporate bylaws that provide clear rules for how your business will operate, delineate procedures for making critical corporate decisions, interact appropriately with background state corporation law and dictate how any disputes among owners--and between owners and officers--will be resolved.
Depending on the number of owners and your future plans for investment and growth, the cost of having bylaws drafted can run a broad range. Through the Priori network, bylaws can typically cost anywhere from $350-$2500. In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and free price quote from one of our lawyers.
Frequently Asked Questions
How are bylaws different from an operating agreement or a partnership agreement?
Bylaws set out the rules and procedures for operations of entities formed as corporations (C-corps, S-corps etc.). Operating Agreements and Partnership Agreements cover similar material, but are only used when an entity is formed as a limited liability company or partnership, respectively.
I already have bylaws. Can I amend them?
Absolutely! If you already have bylaws but are concerned that they aren’t tailored to your company or don’t reflect they way you want to operate your business, a lawyer can help you amend your bylaws. So long as you follow the procedures specified in your existing bylaws, drafting an amended document is a straightforward and important step towards improving your corporate governance.