What is a Corporate Bylaws Review?
Corporate bylaws are a set of rules that companies set up to guide daily operations, management structures, and other activities. Most U.S. states require companies to have bylaws, but it’s also essential to review them periodically to ensure they’re legally compliant and favorable for all parties concerned.
Read the rest of this article to explore corporate bylaws in greater detail, such as what information they typically contain, and how to review them.
What Information Do Corporate Bylaws Usually Contain?
Corporate bylaws are usually drafted when a corporation forms, either by its directors, founders, or legal team. Corporate bylaws contain the following information:
- Company information. This includes the company’s name, location, fiscal year, and if it’s a private or public business.
- Company purpose. This is a statement of the company’s purpose that includes founding information, how it varies from competitors, and its main customers.
- Board of directors information. Bylaws should explain how many directors there are, their roles and qualifications, term lengths, and how vacancies in the corporation are filled.
- Officer information. Directors usually choose officers to run daily business operations, so the bylaws should include information about how officers are appointed and removed, their roles, and their salaries.
- Shareholder meeting information. Details about shareholder meetings are included, such as when annual shareholder meetings are held, how shareholders are notified of meetings, and what task sequence is followed in meetings.
- Threat protections. Some bylaws will include information about how the company can protect itself against threats, such as takeovers.
- Conflict of interest protection. Bylaws can provide guidance for how conflicts of interest should be handled.
- Making changes. Companies change as they expand and grow, so bylaws should change with them. It’s worth adding information about how amendments to the bylaws can be made.
How Can You Review Corporate Bylaws?
Reviewing corporate bylaws requires looking for some important aspects in the document.
Consider State Rules
Check if you’re legally obliged to draft corporate bylaws and what they should include, as this can vary in different states. During a review, check the bylaws according to these rules so that everything in the document is compliant with relevant laws.
Think About “What if?” Scenarios
When reading your company’s bylaws, you should try to consider situations that could happen and see if the document makes provision for them.
For example, it might not (but should) specify how a board member leaving the company will be replaced and what processes should be followed for a smooth transition.
Another important aspect to consider in “what if” scenarios is dispute resolution for deadlock situations. A note about mediation or arbitration to settle these situations is important to keep the issue out of court, which can be costly and time-consuming.
Look for Flexibility
Bylaws shouldn’t be too restrictive or so harsh that they’re not practical. If anything in the document seems a bit too rigid, it’s worth flagging it for amendment. A bit of flexibility should be present, such as by allowing for amendments to the document to be made in an easier way.
Check for Consistency
The bylaws need to be aligned with other company documents, such as contracts. It’s worth checking all of these for consistency to avoid any conflicting information that could cause disputes or confusion.
Seek Clarity
Corporate bylaws are meant to be accessible for all people in the company, so the document should be written in simple, clear terms and not include any complex technical or legal jargon.
Include Meeting Notices
The bylaws should include minimum notice periods that are required for meetings to prevent last-minute meetings that could put others at a disadvantage. How notice must be given to directors, such as via email, should also be specified. Having these details down in writing ensures that everyone knows what to expect.
Flag Generic Clauses
These types of clauses can be vague and confusing. They should be replaced so that they’re customized to the company’s specific requirements.
How Can a Lawyer Help You to Review Your Corporate Bylaws?
Hiring a lawyer to review your corporate bylaws is advisable because these documents can be complex and detailed. They also feature important information such as decision-making powers, so you want to ensure you avoid making any mistakes that could have serious consequences.
Although you might think the document is straightforward, a lawyer can flag it for inconsistencies and might interpret it differently because of their legal background and experience.
Here are some examples of how a lawyer can help you to review your corporate bylaws:
- They’ll consider the laws that apply to and affect the corporate bylaws to guarantee compliance.
- They’re skilled at identifying risks in vague or generic clauses that could be unfavorable, such as by giving too much control to one party.
- They’ll ensure consistency with all company documents, such as policies.
- They’ll save you money, such as by ensuring the document contains provisions for settling future disputes.
- They’ll make revisions to keep the document professional and accurate.
Where Can You Find a Lawyer to Review Your Corporate Bylaws?
Although it can be challenging to find a professional lawyer to review your contract, there are many online legal platforms that strive to make the process much easier. ContractsCounsel is one of the largest online legal marketplace where clients can connect with reliable, experienced lawyers.
You don’t even have to leave your home to consult with a lawyer for a corporate bylaws review. Simply follow these steps.
1. Go to the ContractsCounsel marketplace.
2. Post a project for free, and include a bit of information about what you require.
3. Wait for lawyer bids. You’ll receive multiple bids from lawyers on the platform who want to assist you.
4. Review the lawyers' profiles based on criteria such as their location, years of experience, and client ratings for previously completed projects on the platform.
5. Choose the best lawyer for your purposes, and connect with them. They’ll give you peace of mind that your corporate bylaws document is professional, fair, and legal to protect you and your company.
