Previously a Denver small business attorney from The McGuire Law Firm has drafted articles and discussed corporate articles of incorporation that are filed with the Colorado Secretary of State. Now a business attorney now wishes to discuss another corporate document, the corporate bylaws. The article below has been drafted by a Denver small business attorney at The McGuire Law Firm, and we hope this article will provide you with a better understanding of corporate bylaws.
The Articles of Incorporation of a corporation can be somewhat considered the constitution of the corporation. But, what are corporate bylaws? The corporate bylaws of a corporation can be viewed as the legislation or “law” that regulates the internal operations of the corporation and how the corporation carries on business internally. Unlike the articles of incorporation, corporate bylaws do not need to be filed to be effective. At the initial meeting or the organization of the corporation, the bylaws will be adopted by the incorporators or the directors. This initial meeting whereby the corporation’s bylaws are adopted may also include the election of the corporate officers, authorization of buy-sell agreements or restrictive stock transfer agreements, the issuance of corporate stock, tax elections (making the S Corp election), bank resolutions and other pre-incorporation actions. A majority of the board of directors or initial incorporators may call the initial organizational meeting. The corporate bylaws will thereafter provide the notice requirements for subsequent corporate meetings. Unanimous written consent by the board of directors may be utilized as opposed to a formal organizational board meeting unless such action is prohibited in the corporate bylaws. Later formal board meetings can also be avoided through unanimous consent of the board of directors if the action is not prohibited in the bylaws.
Generally the corporate bylaws will cover a broad range of issues and corporate matters such as designating the first annual corporate meeting, the corporation’s fiscal year, the authority and duty of the corporate officers, the number of corporate directors, form of stock certificates, places(s) of meetings, quorum requirements and indemnification issues. The corporate bylaws can also outline detailed voting procedures. Section 7-110-201 of the Colorado Business Corporation Act, gives the power to adopt, alter or repeal the bylaws after the organizational meeting to the corporation’s board of directors, unless a particular provision specifically prohibits the board from doing so, or such powers are reserved solely to the corporate shareholders in the articles of incorporation. Provisions within the corporate bylaws are considered binding on the shareholders and the corporation, but not always binding to 3rd parties because the provisions are not necessarily a matter of public record. Generally, the bylaws will be kept in the corporate minute book.
A Denver small business attorney at The McGuire Law Firm can assist you with the formation of your corporation and the drafting of corporate documents such as the corporate bylaws, or a buy-sell agreement.