Also known as: by-law · bylaw · bylaws · by law · by laws · corporate bylaws
Written by attorneys · grounded in primary & secondary sources — see below
Rules governing the internal management and affairs of a corporation. The incorporators or board of directors adopt initial bylaws, which must remain consistent with the articles of incorporation and applicable law.
Brian Bailey gathered investors after Crest Cars filed its articles but before any board formed. The group adopted bylaws requiring unanimous board consent for mergers. Gerard sued to invalidate the bylaws. The court ruled the adoption invalid because only incorporators or the board hold authority to adopt initial bylaws.
Roland emailed Sigma Museum directors only thirty-six hours before a special meeting. Two directors attended and approved a sculpture sale under the bylaw quorum of two. Stephanie sued to void the action. The court found notice defective but upheld the quorum because the bylaws validly set a lesser number than the statutory default.
Brookside Pharmaceuticals bylaws limited director candidates to current employees. The articles permitted election from shareholders or other qualified persons. Christopher, a non-employee shareholder, was elected then disqualified. The court declared the bylaw invalid for inconsistency with the articles.
Select any source to read its text and confirm it supports the definition.
Baxter Dynamics board members met under bylaws fixing a two-director quorum for a five-member board. Two directors approved a major contract. A shareholder challenged the action for lack of majority. The court upheld the decision because the bylaws validly established the lesser quorum.
Sun Builders repurchased sixty percent of its shares under articles permitting treasury status. Xena sought a declaration that the repurchase reduced authorized shares. The court held the treasury clause controlled, leaving authorized shares unchanged and preserving Xena's percentage.
Bayside Shipping posted notice of its annual meeting only on a government website fourteen days before the date. Peggy received no direct notice and challenged the election of directors. The court invalidated the meeting because the bylaws and statute required direct notice to shareholders.
Only the incorporators or the board of directors may adopt initial bylaws. Investors or shareholders lack authority to do so before the board is constituted.
Bylaw provisions are unenforceable if they conflict with the articles of incorporation or applicable law. Courts invalidate provisions that raise vote thresholds or narrow eligibility beyond what the articles allow.
Special board meetings require at least two days' notice of date, time, and place unless the bylaws provide otherwise. Verbal objection at the meeting does not waive the defect without a signed writing delivered to the corporation.
A quorum is a majority of directors unless the bylaws set a greater or lesser number. A bylaw quorum of two on a five-member board satisfies the requirement and permits valid board action.
…policies firms could adopt; we need not now advise issuers as to what kind of practice to follow, within the range permitted by law. Perhaps more importantly, we think that creating an exception to a regulatory scheme founded on a prodisclosure legislative philosophy, because complying with the regulation might be "bad…