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Woodland Hills Business Law Blog

Monday, May 5, 2014

Corporate Bylaws

Corporate bylaws are a critical component in the foundation of any corporation. Generally speaking, the bylaws establish the rules for internal operations and governance.  While business owners have a large degree of control when it comes to the bylaws, they must be in compliance with state law. Some states have strict mandates on what information must be included, while others may not specify exactly what must be covered and there may not be a set format. However, there are certain things that are typically covered in a company's bylaws.

Bylaws often set forth what officers the company is to have, what the responsibilities are for those officers, and how they are elected. It will also set forth the term of office such as a one, two, or three year term. Most companies also have a board of directors. The bylaws would also set forth how many board members are allowed or required and their term of office. Most of the time the shareholders will elect the board members, and then the board members will elect or appoint the officers of the company. So, the officers report to the board, and the board reports to the shareholders.

Other matters that are often found in the bylaws include the procedure for notifying the board of an upcoming meeting and the timeline for doing so. In addition, the bylaws can establish the number of board members that are required to be present at a meeting for there to be a “quorum” in order to do business and how many votes are needed for something to be approved. One thing that likely will not be in the bylaws but you might want to consider if there will be multiple owners of the business, is a buy-sell agreement. That agreement would outline rights and responsibilities for each owner and generally would provide the right or option to buy out a co-owners’s shares.

It’s important to consult with a business law attorney to make certain that your bylaws are in compliance with all applicable state statutes. Your attorney may also help you identify potential pitfalls and minimize any future risks that might harm your company down the line.


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The Law Offices of Joseph J. London assists individuals and businesses with Commercial and Residential Real Estate Transactions, Franchise Law, Business Transactions, Corporate/Partnership/LLC Transactions and Dispute Resolutions in the San Fernando Valley, CA including Woodland Hills, Tarzana, Canoga Park, West Hills, Winnetka, Topanga, Reseda, Encino, Northridge, San Fernando, Sherman Oaks, North Hollywood, and Van Nuys, as well as Los Angeles, Malibu, Santa Monica, Thousand Oaks, Burbank and Pasadena in Los Angeles County, Ventura County, Orange County, Riverside County and San Bernardino County.



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