Corporate bylaws are a set of legally binding rules that define how the corporation is managed, operated, and governed.
Editor's note: This post was originally published February 23, 2022 and has been updated for accuracy, comprehensiveness, and freshness on May 14, 2026
Many new business owners decide to structure their companies as a corporation. This business structure gives shareholders limited liability, the credibility to attract investors, and the ability to raise money by selling shares. To protect the interests of the corporation and its shareholders, you’ll need to create corporate bylaws.
Learn more about corporate bylaws, why you need them, how to create them, and how your LegalShield® plan can help.
Corporate bylaws are rules that explain how your business works. They outline who does what and how things get done each day. Clear bylaws can help prevent disputes inside the company.
Your bylaws protect your corporation in several ways:
Many states require a corporation to adopt bylaws. Check your state’s laws to be sure you follow them. Having bylaws is a business best practice even if state laws don’t require them.
Not all businesses need bylaws. As discussed above, many states require bylaws if the entity is formed as a corporation. On the other hand, LLCs have operating agreements that are similar to bylaws. Partnership agreements are also similar. Entities that are formed as non-profit corporations need bylaws to qualify for 501(c)(3) tax-exempt status.
Besides being best practice for your business, your bank or licensing agency may require you to provide a copy of your bylaws as part of their processes.
Again, check with your state’s laws. No matter your business structure or state laws, having a set of governing rules is a good practice.
Every set of corporate bylaws will differ. Why? They reflect the specific business. Most well-written corporate bylaws include rules and regulations that cover a wide variety of information.
Standard details about your corporation include its name and the location of the main office. You’ll also want to explain the purpose of your business. These mission statements can be very important for entities that want to qualify as 501(c)(3) non-profit corporations.
Corporate shareholders are individuals or entities that own stock, making them partial owners. Common shareholders usually have some voting rights. Preferred shareholders often can’t vote. While bylaws address many shareholder-related topics, if a corporation has more than one shareholder, it may also have a Shareholder or Stockholder Agreement which sets out voting rights, stock transfer options, and responsiblities of owners.
The board of directors serves an important purpose for any corporation. The board provides strategic direction, governance, and financial oversight. To be sure that your board’s rules are clear, your corporate bylaws should include:
Your bylaws should also define a quorum for board of directors' meetings. A quorum is the minimum number of directors needing to be present to conduct business and approve decisions.
The board of directors will appoint officers to handle the corporation’s day-to-day operations. Your corporate bylaws define these roles, like:
You might have other officers, as well. Their titles and responsibilities should also be included. Be sure to define how the board can elect, appoint, or remove officers from their positions.
Corporate stock represents partial ownership of the company. Each share can give its owner voting rights (common stock) and dividends (preferred stock). To ensure that the rules for your stock are clear, your corporate bylaws need to include:
Including these details in your bylaws helps you follow laws and keep your corporate ownership structure safe.
Most corporations need to hold annual shareholder meetings to follow state laws. Your corporate bylaws should state when, where, and how you’ll hold these meetings. The bylaws should also define how many shares need to be represented for a quorum.
The corporation may also have quarterly or special meetings. Your corporate bylaws should say what must happen to call these meetings.
Your board of directors can make groups called committees. Many corporations have several standing committees. For example, executive committees handle urgent issues. Governance committees oversee policy reviews and the board of directors.
You need to ensure that your committee rules are clear, so your corporate bylaws should list:
Sometimes, you may need ad hoc (short-term) committees to handle specific tasks.
Board members may be involved in several business ventures. Your bylaws should say that directors have to tell the board about any conflicts of interest they have. In these cases, that member shouldn’t participate in discussions or decisions related to the conflict.
Disputes happen in business. Clearly explain how you’ll resolve internal disputes in your corporate bylaws. Mediation and binding arbitration are options. Handling disagreements in-house is usually faster and cheaper than taking them to court.
Sometimes, tied votes cause disputes. Explain how you’ll handle this situation.
Now that you have your bylaws prepared, how do you make them official? Since bylaws aren’t filed with the state, the way to make them an official part of the company record is to make sure they are voted on and approved by the Shareholders and that vote recorded in the company’s minutes. The Directors, once appointed, can also recognize the bylaws in their own meeting, or by signing an acknowledgement of the bylaws.
The rule for updating your bylaws is simple: Are you doing things differently than what is currently written? If the answer is yes, your documentation is outdated and your legal protections are at risk.
Your bylaws must reflect how you actually operate, not how you started. Review and revise your documents during these key shifts:
Ownership and leadership changes: Update your bylaws whenever you add or remove shareholders, change the size of your board, or define new roles for officers like a CEO or CFO to ensure voting quorums and authority levels match your current reality.
Corporate bylaws are put in place to govern how a company works. However, bylaws can’t conflict with federal and state laws.
Before adopting new bylaws, make sure they:
You may need to update your corporate bylaws at some point. Your bylaws should address how they can be amended. Who can ask for an amendment? How many votes are needed to pass one?
Before making bylaw changes, many corporations require:
Even if your state doesn’t require them, it is best practice that a corporation have a set of clear bylaws. These legally binding documents govern how your business runs and provide important legal protections. It may seem overwhelming to write and maintain your bylaws alone; a LegalShield provider lawyer can advise you to be sure that you keep those legal protections and comply with state laws.
With a LegalShield Business Plan membership, you receive guidance with any number of business-related legal concerns, like business structure and document review. There’s no need to pay expensive consultation fees when LegalShield offers three affordable monthly subscription plans. Don’t wait to protect your business — choose a LegalShield Business Plan today.
State laws would govern your company. You’d leave your company open to risks. You may not have the financial, legal, or operational protections and stability found by adopting clear bylaws.
Bylaws are legally binding contracts full of the rules that govern your corporation. The bylaws should include what to do if someone breaks those rules. Actions might be removal from office, lawsuits, or even court orders that protect the corporation. The court could also force the corporation to dissolve.
In many cases, shareholders can force bylaw amendments. They have to follow the procedures and voting rules that are included in the bylaws. Some changes may require unanimous approval.
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Your registered agent is your business’s official point of contact, and you need one in every state where your company is formed or registered.
We’ll cover all the steps and even tell you about more things you’ll need to do after your LLC filing in Tennessee.
Your LLC won’t officially exist until the state accepts your Articles of Organization. You’ll need the filed document to open LLC bank accounts, apply for business licenses, and sign contracts.
While this guide gives you useful information about paying yourself from an LLC, it is recommended that you consult with a CPA or an accountant so your LLC is set up with the best tax classification to meet your needs and maintain compliance with IRS regulations.
Running a corporation, no matter how small, requires ongoing documentation. Without a comprehensive record book, it’s harder to find and follow your corporate rules and meet reporting requirements.
