Illinois Corporate Bylaws Attorney
When starting your corporation, you want to make sure everything is in place for your business to start running and to attract investors to your company. You can use corporate bylaws to provide a clear framework on how the business should operate, you will streamline the decision-making process and minimize misunderstandings among the members of your business.
With well-drafted corporate bylaws, you will ensure your team is on the same page and demonstrate your business is properly structured, ready to get involved in bigger transactions.
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What are Corporate bylaws?
Corporate bylaws are the governing legal document in which a company outlines the structure of its organization, its operational procedures, and the roles and responsibilities of those who manage it.
This contract defines the framework of a corporation to guide the actions of the shareholders and board of directors and set clear expectations for all parties. Corporation bylaws may include the following elements:
- Board of directors
- Shareholders’ meetings
- Officer structure and management
- Amendments to Bylaws
- Provisions for company protection
Are Corporation bylaws required?
To legally establish your business as a corporation, you will need to file the Articles of Incorporation with the corresponding Secretary of State. Additionally, you can be required to create corporate bylaws depending on the state of registration. If yours is a private company, your bylaws do not need to be public or filed with the Secretary of State.
Regardless of the law, it is a good idea to create corporate bylaws to provide your company direction and a stable foundation to be prepared for growth.
Some good reasons to have company bylaws include:
- Give direction to your business: Set the foundation for future operations and decision-making processes.
- Obtaining financing: Investors, lenders, and banks may request company bylaws to gauge the profitability of the business.
- Prevent disputes: Ensure all managers and directors have clear expectations and understand their role in the company.
- Give your business legitimacy: During a legal dispute, when applying for a loan, or in any other business transactions, you can use your bylaws to demonstrate that your company adheres to the appropriate corporate regulations in its operations.
What to include in corporate bylaws?
Depending on the state your business is registered in, you may need to follow certain rules on what to include in the corporation’s bylaws. Despite the legal requirements, your corporate bylaws should contain the following elements to establish the right structure and protect your business:
- Identification information: Include the basic information about your company, such as name, office location, place of business, and fiscal year. The name of your company must appear exactly as it was filed in the Articles of Incorporation. Specify whether your company is regarded as an S corporation, C corporation, nonprofit organization, or a professional corporation. You can also include the state in which your company was incorporated.
- Statement of purpose: Describe the objective your company pursues so investors know its reason for being.
- Board of Directors: This provision will specify the details related to the primary governing body of the company, the directors. Ensure the company bylaws define:
• The maximum and minimum number of directors
• Number of years the director can stay in the position.
• Whether directors will be separated into classes
• Their roles, responsibilities, and decision-making power
• Election, removal, and resignation procedures
- Regular Meetings: Corporations must have management meetings to develop initiatives, address issues, and discuss the company’s current status. The bylaws will specify the conditions under which meetings will be held. Bylaws will dictate:
• The frequency, place, and location of meetings
• Number of directors that must be present to make a quorum
• The creation of board committees
• Procedures to take special meetings
- Corporate structure: Define the levels of a corporation by choosing a simple officer structure or a custom one. The officers of a corporation are in charge of the day-to-day operations of the company. This section will identify the different positions of officers and each’s responsibilities. This can include the president, vice president, secretary, or the C-suite (CEO, CFO, COO). Bylaws will include information on:
• Electing, appointing, and removing officers
• Rights and responsibilities
• Filing vacancies
- Shareholder meetings: Corporations should also include information about shareholder meetings, such as:
• Time and location
• Required quorum
• Actions to take in the meetings
• How are shareholders going to be notified about meetings
• Whether there is the possibility of a voting trust, or giving their voting shares to a third party
- Stock certificates: The bylaws will define whether the corporation chooses to issue or not issue stock certificates. These are only tangible evidence of the ownership of shares, and they are not necessary to acquire shares. However, shareholders may demand stock certificates, for most corporations choose to issue them.
- Protection against threats: The corporate bylaws are meant to also protect the company and its managers against threats, such as hostile takeovers., disputes, or litigation. This section may include dispute resolution provisions, or indemnification clauses, which determine compensation for directors in the event of personal liability.
- Required amendments: The corporation bylaws will define what is the procedure to follow if the document needs updates or changes, such as the required votes to approve those modifications.
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Our corporate attorneys prepare your company for success
At Motiva Business Law, our experienced attorneys are dedicated to helping corporations thrive and stay protected through expertly crafted corporate bylaws. Our team understands the critical role that well-drafted bylaws play in establishing a strong foundation for corporate governance. We review your agreement to ensure it is written in your best interest and also help you negotiate more favorable terms so you make the most out of your investment.
By leveraging our expertise, corporations can navigate legal intricacies with confidence, knowing that their bylaws are meticulously tailored to protect their assets and uphold their best interests.
With our unwavering dedication and proactive approach, our corporate attorneys stand as trusted partners in our clients’ pursuit of excellence and security in the corporate landscape.
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Corporate bylaws FAQ
Corporate bylaws are required in most states, including Florida and Illinois. However, they are essential to maintain the structure and direction of a company and prepare it for growth.
The articles of incorporation is a required document when formally registering your company under the Secretary of State that includes the basic structure of your corporation. On the other side, corporate bylaws are not always legally required, but they provide an in-depth description of the company’s governance that defines how it will operate and the roles of shareholders, directors, officers, and employees. In summary, the articles of incorporation legally establish the existence of the corporation, while the bylaws govern its internal operations.
Corporate bylaws are specific to corporations and govern their internal operations, while operating agreements are specific to LLCs and outline the ownership and operational structure of the business.
Yes, bylaws can be amended according to state laws and the internal rulings of the company, which may be included in the corporate laws.
Contrary to the articles of incorporation, corporate bylaws are not public and do not need to be filed unless your company is publicly traded or it is a non-profit organization.