How to Create By-Laws
Bylaws function as the constitution of an organization. They are typically drafted by founders of corporations, although unincorporated associations use them as well. Even though no state requires corporations to create bylaws and most have no provision for filing them with state authorities, bylaws can become important in the event of an internal dispute. Bylaws deal with issues such as voting rights, management, meetings, elections, organizational record-keeping and changes in membership or shareholding.
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Instructions
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Put the organization's identifying information at the top of the document. For a corporation, list the legal name (not necessarily the same as the trade name) and the principal place of business appearing in the Articles of Incorporation.
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List the organization's leadership positions in the first section. For a corporation, list the authorized number of directors and the titles of corporate officers. Describe the duties of the directors and the limitations on their authority. Do not list individual names, so that there will be no need to amend the bylaws every time a new director is elected or a new officer is appointed.
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State the number of shares that may be issued, if your organization is a corporation. If the corporation is authorized to issue more than one class of stock, list the number of authorized shares for each class and describe the rights that are associated with them (some corporations, for example, issue shares that do not carry voting rights).
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Describe the procedure for holding meetings. Corporations are legally required to hold periodic meetings of the board or directors and the shareholders. Include the date, place and time of the meetings, as well as the procedure for notifying directors and shareholders. State the minimum requirement for a quorum -- shareholders representing 50 percent of all issued shares, for example.
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Outline the procedure for electing and replacing organizational officers. For a corporation, include procedures for shareholders to appoint proxies to vote on their behalf if they do not attend a shareholders meeting. List the lengths of the terms of the directors.
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Detail organizational record-keeping requirements. For a corporation, state how and when shareholders and directors may examine corporate records. State laws require corporations to keep minutes of shareholders and directors meetings.
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Include procedures for amending the bylaws. State laws allow corporations to divide the authority to amend bylaws between shareholders and directors, as long as the shareholders hold ultimate authority.
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Tips & Warnings
Start with a set of sample bylaws (see Resources section) and modify them to suit the requirements of state law and the needs of your organization.
State laws include a number of limitations on the terms that can be inserted into corporate bylaws, although these limitations vary from state to state. A state may, for example, forbid a corporate board of directors from dissolving the corporation without shareholder consent.
References
Resources
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