- Annual meetings are mandated for the corporation
- Special meetings can be called by the shareholders or Board
- Each meeting must be preceded by a notice to all shareholders with sufficient time to review the material and to decide if they wish to participate (typically five days)
- A quorum must be present before any business can be conducted in a meeting of the shareholders.
- The order of succession in the event the president is not present
- How votes (the ratio of which is decided in the Articles of Incorporation) are taken in person or by proxy
- A complete list of shareholders must be present at any meeting of the shareholders. Only shareholders in good standing may vote. Shareholders in good standing can not be denied a vote.
- How shareholders may consent to action in lieu of a meeting
- The bylaws set the number and term of directors, generally set by a range (i.e. no less than three, no more than nine, and odd in number). Terms are generally given in years, but may be require amendment based on the terms of a Stock Purchase Agreement, which will be implemented through the Articles of Incorporation.
- The process for filling vacancies on the Board
- When and how the Board shall meet for its regular meetings (generally monthly or quarterly, in person and by teleconference)
- Powers of the Board including:
- Declare dividends
- Acquire assets
- Obligate the company for contracts, etc.
- Remove officers of the company
- To appoint officers of the company
- Create compensation plans for the company (stock, options, warrants, bonus, etc.)
- Bind insurance for the company
- Manage business for the company
- Compensation of directors
- The bylaws define the Board’s ability to create committees of the Board (compensation, nomination, finance, etc.)
- The bylaws define the positions and roles of officers. Generally, the president, treasurer, and secretary are filled, but others may be required, such as vice president.
- The bylaws dictate the style and substance of a stock certificate, including its replacement if lost. Once upon a time, stock certificates were mandatory, but increasingly we see companies issuing stock and maintaining a detailed capitalization table instead of physical shares. This is why it is critical that you frequently review the cap table of any investment to ensure mistakes have not been made.
- The bylaws define how shareholders may waive certain rights, including, and most commonly, notice. In the event of a special meeting for which the required notice period was not observed (or not possible), the shareholders may elect to waive notice so that business may be conducted at the meeting.
- The bylaws define the form of an acceptable signature, including electronic.
- The bylaws set the fiscal year for the corporation.
- The bylaws generally indemnify the Board Members so long as he/she has acted in good faith in a rational manner.
- The Board members may incur expenses on behalf of the corporation for which the corporation is responsible for reimbursement, typically this is done in advance.
- The corporation may bind insurance for itself or to protect the directors, including Errors & Omissions and Directors & Officers insurance.
- The Bylaws may only be amended by a vote of the shareholders.
For more information:
- The Balance – What are Bylaws for a Corporation?
- LegalZoom – What Information must be in your Bylaws
- Legal Nature – Top 10 Provisions to Include in your Bylaws
This is published under the Appalachian Regional Commission POWER Grant, PW-1835-M.
Copyright Appalachian Investors Alliance, Inc. 2018
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