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For people in California who are looking to start a business, corporate bylaws are an important topic to understand. The provide the foundation for how a company will act and how it intends to conduct itself.

Meaning of corporate bylaws

Corporate bylaws are not just a consideration: corporations are required to have them, and they must be accessible in case the IRS or regulators at the state or federal level want to see them. The original set of bylaws is written and approved by the board of directors when the company is founded, and they can be amended later on. The bylaws contain fundamental facts about the company, like its name, structure, address, and the fiscal year cycle, plus descriptions of all corporate officer roles, their terms and voting mechanisms, a list of directors, and the structure and timing of shareholder meetings.

Bylaws and financing

The bylaws should list how the company‘s stock is organized, how the company plans to issue the shares, and the connection between the stock and voting rights. This is especially important if the company plans to offer more than one class of stock, with each one having their own set of voting rights. The company may want to define one type of stock for founders and insiders and another for the general public, for example.

Corporate bylaws are required and they are crucial for defining the basic elements of the company’s structure and leadership. The bylaws have to be made available to potential inspection by the government, but do not have to be filed with any government agency at the state or federal level.

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