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Corporate bylaws
 
 
Of the documents that a business creates when it becomes a corporation, the bylaws set the pattern for the way its officers will make decisions what standards they will follow. Bylaws form the "bones" of the corporate body.
 
Bylaws organize a corporation so that basic operating processes are uniform as long as the corporation exists. Bylaws are not usually filed with the state like articles of incorporation but violation of bylaws may result in civil suits by shareholders or other officers. Essentially, they give the business its mission and rule book for general corporate operation. In addition to the name of the corporation, where it is located, what officers are elected--and how they are elected--ownership and shareholder participation are defined. The number of shares and procedure for issuing and selling stock is outlined. Perhaps most importantly, bylaws establish rules for how decisions affecting the corporation are made, setting dates for annual meetings and dictating procedure for shareholder meetings, elections and proxies. Business that must be conducted at meetings is defined and voting procedures outlined. These rules do not govern the day-to-day decisions that are made in the business but document the agreement of the owners as to how the corporation operates. All officers have an obligation to know the bylaws and conduct themselves according to the policies contained in them.
 
Bylaws are the first--and controlling--instrument of corporate governance that any business adopts. Bylaws for large corporations with large groups of shareholders, officers and boards of directors must be fairly complex but most small businesess are best served by simpler bylaws that only include sections establishing name, location, officers and stock with sections on annual meetings record keeping and practice standards. They must become an integral part of the way officers think about their company so most bylaws are as simple as possible, leaving detail to policies that can more easily be adopted--and changed . They must be flexible enough in their structure to allow the corporation to function through changes in size and profitability; and they must provide stable procedures for changes in leadership and even, eventually, ownership. Although bylaws are written with some thought to future changes, most spare the detail and rely upon a clearly-detailed amendment process to deal with eventualities.