Corporate by-laws and Corporate governance
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Discuss critical areas that should be covered by corporate by-laws and their impact on corporate governance. What areas do you think are the most important?
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Solution Summary
Background: Corporations are governed by their corporate bylaws. Corporate and organizational bylaws regulate only the organization to which they apply and are generally concerned with the operation of the organization, setting out the form, manner or procedure in which a company or organization should be run. Either the incorporators or initial directors can adopt the bylaws of the corporation. The bylaws are much more detailed than are the articles of incorporation. Bylaws may contain any provisions for managing the business and affairs of the corporation that are not inconsistent with law or the articles of incorporation [RMBCA § 2.06]. They do not have to be filed with any government official. The bylaws are binding on the directors, officers, and shareholders of the corporation.
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Background: Corporations are governed by their corporate bylaws. Corporate and organizational bylaws regulate only the organization to which they apply and are generally concerned with the operation of the organization, setting out the form, manner or procedure in which a company or organization should be run. Either the incorporators or initial directors can adopt the bylaws of the corporation. The bylaws are much more detailed than are the articles of incorporation. Bylaws may contain any provisions for managing the business and affairs of the corporation that are not inconsistent with law or the articles of incorporation [RMBCA § 2.06]. They do not have to be filed with any government official. The bylaws are binding on the directors, officers, and shareholders of the corporation.
The board of directors has the authority to amend the bylaws unless the articles of the incorporation reserve that right for the shareholders. The shareholders of the corporation have the absolute right to amend the bylaws even though the bylaws may also be amended by the board of directors [RMBCA § 10.20]
Every member, director, and officer should be given a copy of the bylaws and they should be encouraged to read and understand them. For more information about structuring your organization's individual bylaws, consult your attorney.
Revised Model Business Corporation Act (RMBCA)
Discussion of critical areas: The bylaws govern the internal management structure of the corporation. For example, they typically specify the time and place of the annual shareholders' meeting, how special meetings of shareholders are called, the time and place of annual and monthly board of directors' meetings, how special meetings of the board of directors are called, the notice required for meetings, the quorum ...
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