Bylaws (in a UK company called the articles of association which contains similar provisions) are the rules and administrative provisions that govern the internal structure of the corporation and regulate the way in which a corporation’s internal affairs are governed. They are superseded only by the charter, and the law of the jurisdiction of incorporation. In some jurisdictions the corporate formation process is not complete until the bylaws have been adopted.
Conflicts between the bylaws and charter (called the memorandum of association in the UK) are typically resolved in favour of the charter. There is generally less statutory guidance for the drafting of bylaws than for the charter, and bylaws are often not required to be filed with the authorities (for example, in the US). Moreover, bylaws are easier to amend than the charter. The articles of association of UK companies are often modelled on Table A, which is a specimen set of articles of association for a private company limited by shares which has been included as a schedule to the UK Companies Act. Ultimately, most modern corporate laws afford corporations great freedom to determine their governance practices.
Generally, bylaws cover such topics as the election of directors, the transfer of shares and share certificates, corporate acts such as the execution of contracts and financial instruments, and the appointment of corporate officers. In addition, bylaws govern the conduct of directors, corporate officers, board of directors’ meetings, and shareholders’ meetings, including such details as times, locations, and voting procedures. They also contain a description of management duties which should be comprehensive enough that officers can rely on them to manage the corporation’s affairs.
Bylaws are usually adopted by the incorporators at their organizational meeting and, in general, may subsequently be amended by the board at the initial meeting of the board of directors.