The Basics of Bylaws

Written by: Caroline Kim

December 28, 2024

Startup bylaws are one of the ways the future of the business can be protected. While not every company has bylaws, most corporations are required to. According to Westaway, bylaws establish “clear guidelines and protocols for key decision-making processes. Bylaws serve as a roadmap that outlines the company’s vision, mission and values, which helps ensure everyone is on the same page… provide clarity on how the company should operate, how decisions should be made and how potential conflicts should be resolved.” Bylaws outline and reference the ownership that shareholders have, process of removing officers/directors when necessary, board member voting rights, appointments, job descriptions, and responsibilities of corporate directors (Mohamed). Essentially, they function as an established handbook for the company.

According to Westaway, there are 3 core components of company bylaws: statues, certification of incorporation, and bylaws. Statutes essentially “govern the operation and management of  corporations”, touching on details such as management of corporate assets, rights and responsibilities, and security (Westaway). These statues set up a firm boundary for the corporation while still allowing the freedom needed to grow. Next, the certificate of incorporation is essentially a legal documentation of the corporation, which is filed with the secretary of state. This section may further detail on the shareholders rights and responsibilities. Last but not least, the bylaw section lays out the procedures set forth to govern the corporation, also incorporating an outline of the company’s values, mission, and goals (Westaway). In general, there are specific terms and positions that are detailed in most bylaws, some being corporate offices, stockholders, board of directors, committees, indemnification, records, officers, and amendments (Westaway). Having a clear set of bylaws is essential to every company as they serve as a key component in legal issues and conflicts. 

Sources:

1. Mohamed, Raees. “Incorporating Your Tech Startup: The Importance of Bylaws.” RM Warner Law, 14 Feb. 2023, rmwarnerlaw.com/blog/importance-of-bylaws-incorporating-your-tech-startup/. Accessed 25 Dec. 2024. 

2. Westaway. “Startup Bylaws: What They Are and How They Work.” Westaway, 1 Feb. 2024, westaway.com/faq/startup-bylaws-what-they-are-and-how-they-work/. Accessed 25 Dec. 2024.