Corporate bylaws are legal documents that outline the internal rules and procedures for governing a corporation. The specific content of corporate bylaws can vary depending on state laws and the corporation’s needs. In recent years, many states have relaxed certain formalities, allowing corporations to streamline their processes. Here’s how corporate bylaws may be affected by these changes:
Necessary Subject Matter in Corporate Bylaws:
- Corporate Name and Purpose: Bylaws should still specify the corporation’s legal name and its primary purpose or business activities.
- Registered Agent and Office: Information about the registered agent and the registered office remains important for legal and administrative purposes.
- Shareholders’ Meetings: While traditional in-person meetings may be relaxed, bylaws should address alternative methods of conducting meetings, such as virtual or written consent.
- Board of Directors: The structure of the board and director elections are fundamental aspects, and these provisions may adapt to virtual meetings and electronic voting.
Unnecessary But Optional Subject Matter:
- Indemnification: Corporations might include indemnification provisions to protect officers and directors from personal liability, but these are not directly affected by relaxed formalities.
- Committee Structure: Details about committees, their functions, and how they operate can still be included for clarity.
- Proxy Voting: While traditional proxy voting procedures may be less common, corporations can outline electronic proxy voting procedures in their bylaws.
- Amendment Procedures: Procedures for amending the bylaws themselves should be retained for legal compliance.
- Conflict of Interest Policies: These policies continue to promote transparency and ethical behavior, especially when conducting virtual meetings.
In essence, while some formalities may be relaxed, the core principles and structure outlined in corporate bylaws remain crucial. Corporations should work closely with legal counsel to ensure that their bylaws comply with state laws and adapt to any changes in formalities. Additionally, they may want to include provisions that address the use of technology for meetings, electronic voting, and other modern practices to ensure the bylaws remain relevant and effective.