Maryland Corporate Bylaws
Your corporate bylaws establish the rules, procedures, and organizational structure of your Maine corporation. They determine who has decision-making power and how decisions are made. Your bylaws should include policies for appointing officers and directors, holding shareholder and board meetings, and managing conflicts of interest, among other issues.
Unlike your Articles of Incorporation, which must be filed with the State of Maryland Department of Assessments and Taxation (SDAT), your corporate bylaws are internal documents that don’t need to be filed with a state agency. However, every corporation in Maryland is required to adopt bylaws. Since we know creating corporate bylaws can be challenging, Northwest offers a free, Maryland-specific corporate bylaws template that has been drafted by an attorney.
Why do I need corporate bylaws?
Creating bylaws is a necessary step for any legitimate Maryland corporation. Here are a few reasons why:
1. Corporate bylaws are legally required in Maryland.
MD Corp & Assn Code § 2-109 (2019) states that after incorporation, the board of directors “shall hold an organizational meeting to adopt bylaws.” So to stay legally compliant, your corporation must have bylaws.
2. Corporate bylaws establish the rules and roles within your corporation.
Your corporate bylaws formalize the rules and structure of your corporation, They determine the number of directors and officers you will have and what their powers are, as well as when and where you’ll hold board and shareholder meetings and how voting will take place.
Since your bylaws document all of your corporation’s rules, you can consult them when there is a dispute between board members or shareholders.
3. Corporate bylaws prove that your business is a legitimate corporation.
Your corporate bylaws show the world that your corporation is legitimate. Potential investors and landlords will want to look at your bylaws to make sure your corporation is operating aboveboard. You’ll also need to show your bylaws to open a corporate bank account.
If your corporation ever faces a lawsuit, your bylaws can help you maintain your limited liability status. Following the rules and procedures in your bylaws helps show that your corporation is a separate legal entity with limited liability protection.
What is included in Maryland Corporate Bylaws?
Maryland corporate bylaws should include your corporation’s policies and procedures for handling finances, management, and other important issues. According to MD Corp & Assn Code § 2-110 (2019), you can include any rules in your bylaws that aren’t inconsistent with Maryland law or your Articles of Incorporation. Here are the topics that all corporate bylaws should cover:
- Directors and officers
- Amendments and emergencies
Who prepares the bylaws?
The board of directors prepares the bylaws. Since corporate bylaws are complex documents that carry a lot of legal weight, corporations will often consult with a lawyer before finalizing their bylaws. Northwest provides a free, attorney-drafted corporate bylaws template specifically for Maryland corporations that can get you started.
Are corporate bylaws legally binding?
Yes. All shareholders, board members, and officers are legally bound to follow the corporate bylaws. Going against the rules in your bylaws could lead to your corporation losing its limited liability status.
Are bylaws filed with the state of Maryland?
No. Corporate bylaws are internal documents that are not filed with the Maryland Department of Assessments and Taxation. Your bylaws should be kept on record with your corporation’s other documents, such as meetings minutes and resolutions.
Do bylaws need to be signed?
Technically, a board of directors can adopt bylaws without signing them. However, including the signatures of all board members and officers shows that everyone in your corporation agrees to your rules and procedures.
How do I amend my bylaws in Maryland?
Corporations usually establish the procedures for amending bylaws in the bylaws themselves. For example, corporate bylaws usually define the number of board members who need to be present for a vote to take place (called the quorum) and the number of votes needed to approve an amendment.
MD Corp & Assn Code § 2-109 states that only shareholders may amend the bylaws, unless the bylaws or Articles of Incorporation (also called the charter) give the board of directors the power to amend bylaws.