How to Amend Coporate Bylaws: Everything You Need to Know
If you're wondering how to amend corporate bylaws, first you'll need to know what they entail.4 min read
If you're wondering how to amend corporate bylaws, first you'll need to know what they entail. Bylaws are rules for running a corporation and the rights and responsibilities that the owners and managers have. Articles of Incorporation give a general outline for the business, and bylaws give details on how it should be run and what the roles of each member are.
Bylaws commonly cover things like:
- The roles and powers of officers and directors.
- How officers and directors vote.
- Which committees are permanent.
- The way meetings are held and recorded.
- The process for members to come and go.
- Disbanding or separation processes.
- How the bylaws and articles are amended.
- Establishing or changing the logo or seal.
- The requirements for annual reports.
- The requirements for legal compliance.
It's common for companies to change or add to their bylaws to better fit the company as it grows.
Articles of incorporation are legally required by every state, while bylaws usually aren't depending on the state.
Courts will often check for bylaws if there's a dispute or conflict within the company.
It's usually easier to amend bylaws than Articles of Incorporation because the voting requirements are less strict.
Bylaw amendments also don't need to be filed with the SOS, so there's no need for formal requirements and filing fees.
Bylaws should already contain the procedures for voting and amending. Shareholders and board members are usually the people who vote, but the amount of power their votes hold may vary.
Articles of Incorporation
Articles must have all the information required by the state and be filed with the Secretary of State.
This information includes:
- The name of the corporation.
- The purpose of the corporation.
- The corporation's registered agent and their contact information.
- The person incorporating the business.
- How many shares of stock the company has.
- What type of stocks they are.
- The names of the officers and directors.
- The company's legal address.
Each state has different requirements, so be sure to research your own state's law.
If the state law around incorporation changes, businesses in that state must change their articles of incorporation to fit. Changes to the articles often have a substantial effect on how the business runs.
The most common reason for changing the articles is a change in staff. The directors, officers, and members are usually listed by name in the articles, so if someone is replaced, their name must be replaced in the articles.
If the articles aren't changed accordingly, the business could be in violation of state law.
Having correct contact names and addresses lets the Secretary of State notify the members of any legal matters, tax issues, etc. without hassle.
Amending Corporate Bylaws
Amendments to bylaws usually go into effect as soon as they are passed. Before amending, be sure to check that any changes you want to make aren't already in the articles. You can talk about amending the bylaws in any regular meeting, or hold meetings specifically to discuss it.
A special notification is required for the specific meetings.
Sometimes the bylaws say how many votes are needed to pass an amendment, but usually, it's just a majority. Most states require companies to keep accurate records, also called minutes, of the meetings and votes. Within the minutes should be a copy of the amendment, whether or not the board approved it, and the vote tally. Usually, the secretary of the corporation signs the minutes.
The bylaws might also say who has the power to vote, which is usually all the shareholders and board members. Make sure everyone sees and reviews the proposed amendment before the vote.
If the amendment passes, write out a resolution explaining the changes. Put the resolution in the minutes and keep a copy with the corporate files.
Be sure that a quorum, or the minimum amount of people that need to be present to vote, is at the meeting. The bylaws might cover how large a quorum you need.
The minutes should say who was at the meeting, what the amendment is, if it passed, and the vote tally.
Make sure to update the official bylaws after an amendment passes to avoid confusion. It's best to keep all the official updated bylaws in one document.
If the articles are amended, send a copy of the updated articles to the Secretary of State. Usually, you'll have to fill out a form to help you file them. Sometimes there's a fee associated with filing updated articles.
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