Why do I need corporate bylaws?
Delaware corporate bylaws are not filed with the Delaware Division of Corporations (like your Delaware Certificate of Incorporation). However, they just as fundamental for forming your business for these key reasons:
1. Corporate bylaws establish the rules and roles within your corporation.
Bylaws create the processes you’ll use for forming several important aspects of your corporation, from establishing your board of directors, running shareholders’ meetings, distributing stocks and even implementing record-keeping procedures. With company-wide policies in place, you can avoid unnecessary conflicts that might otherwise slow your business or cause legal problems down the road.
2. Corporate bylaws prove that your business is a legitimate corporation.
Corporate bylaws are official legal documents. In the case of a lawsuit, your corporate bylaws will help reinforce your corporation’s limited liability status. And many third parties you’ll do business with—from bankers and landlords to potential investors—will ask to see your bylaws.
Does Delaware require corporate bylaws?
Though Delaware statutes frequently imply the existence of bylaws, they don’t explicitly say they’re required. (For example, DE Code § 109 states that bylaws “may be adopted.”) But bylaws are essential for a well-functioning corporation.
What is included in Delaware corporate bylaws?
Bylaws can include anything not already covered by Delaware’s statutes or contradictory to your articles. But strong bylaws are essential and should include information about:
- Meetings
- Stock
- Directors and officers
- Finances
- Records
- Amendments and emergencies
Who prepares the bylaws?
According to DE Code § 109, bylaws can be prepared by incorporators, initial directors, initial members, or the board of directors (unless a stock corporation has already received payments, in which case shareholders vote on bylaws). While it’s a good idea to consult with a lawyer before finalizing your bylaws, you can use our free, Delaware Corporate Bylines template to help get you started.
Are corporate bylaws legally binding?
Yes. Your Delaware Corporate Bylaws are official legal documents, which means you can use your bylaws as evidence to defend your corporate practices, should you ever face a lawsuit. On the flip side, this also means that you could face negative legal consequences if you act in contradiction to your bylaws.