Once a corporation has been formed in Georgia, one of the first tasks of its board of directors will be to draft and adopt corporate bylaws. A corporation’s bylaws are important because they are legal rules that define how the company’s management structure will work and how the company will operate. Through its adoption of corporate bylaws, the board of directors can ensure the corporation maintains consistent policies and procedures even when officers and directors leave and are replaced.
Understanding corporate bylaws
Corporate bylaws are internal rules drafted into a legal document that defines how the business will operate. The bylaws control the company’s decision-making process and how the board will handle voting. Unlike the company’s policies that are contained in employee handbooks, corporate bylaws control decision-making procedures at the board level. They include the duties and responsibilities of corporate officers, directors and employees.
What sections are contained in corporate bylaws?
A corporate bylaws business law document typically includes the following sections:
- Statement of purpose – A statement to inform future officers of why the company was founded and to provide potential investors with information about the company’s future direction
- Management structure – Defines the chain of command and how vacancies will be filled
- Procedures of management meetings – A section about how management meetings will be scheduled and conducted
- Amendment rules – Rules for how amendments to the corporate bylaws can be made and the percentage that must agree to changes
Corporate bylaws must be carefully drafted because they control how a corporation will operate and the rules and duties of corporate officers, executives and employees. When they are correctly drafted and adopted by the board, corporate bylaws can facilitate the success of the company.