Vermont Corporate Bylaws
Your bylaws are where you decide on the policies, procedures, and management structure of your Vermont corporation. Corporate bylaws cover everything from how many officers and directors you’ll appoint to how you’ll vote on amendments to what you’ll do if the business goes under (knock on wood).
Unlike the Vermont Articles of Incorporation, there is no government form to fill out for corporate bylaws. Bylaws are internal and drafted by the corporation. For that reason, it can be tricky for a new business owner to know where to start with creating their corporate bylaws. That’s why Northwest offers a free, attorney-drafted corporate bylaws template, just for Vermont corporations.
Why do I need corporate bylaws?
Every legitimate Vermont corporation will have corporate bylaws. Here’s why they’re important.
1. Corporate bylaws are legally required in Vermont.
Vermont law requires the incorporator or board of directors of a corporation to adopt initial bylaws, per 11A V.S.A. § 2.06. If your corporation is found to be operating without bylaws, a court could rule that its not a valid corporation, and you could lose your liability protection.
2. Corporate bylaws establish the rules and roles within your corporation.
Bylaws establish the powers and responsibilities of your officers, directors, and shareholders. They also establish routine processes like holding shareholder and board meetings and voting. If there’s ever a disagreement within your corporation (and let’s admit it—there will be), your bylaws can tell you how to proceed.
3. Corporate bylaws prove that your business is a legitimate corporation.
Bylaws show the world that your corporation follows standard protocols. Banks, landlords, and investors will all ask to see your bylaws to make sure your corporation is the real deal.
What is included in Vermont Corporate Bylaws?
You’re free to include any rules in your bylaws that suit your business needs, as long as they are consistent with Vermont law and your articles of incorporation. However, the following topics are essential to include:
- Directors and officers
- Amendments and emergencies
Who prepares the bylaws?
Either the directors or the incorporator (if the directors have not yet been appointed). Usually bylaws will be adopted at the first organizational meeting. You can use our free, attorney-drafted bylaws template as a foundation.
Are corporate bylaws legally binding?
Yes. Bylaws carry serious legal weight. If your business ever goes to court, your bylaws can be used to enforce a decision. Officers and directors can be removed from their positions if they break the rules of your bylaws. And a corporation that violates its bylaws can even lose its limited liability status.
Are bylaws filed with the state of Vermont?
No. Bylaws are considered internal, so they don’t need to be filed with the Vermont Secretary of State. Instead, file your corporate bylaws with your corporation’s records.
Do bylaws need to be signed?
No, but it doesn’t hurt to sign them. We encourage corporations to have their officers and directors sign their bylaws to show that everyone’s on the same page.
How do I amend my bylaws in Vermont?
According to 11A V.S.A. § 10.20, either your shareholders or directors may amend bylaws, unless a rule in your articles of incorporation states that only shareholders have the power to amend. Your corporation can govern its own process for amending bylaws in the articles of incorporation or the bylaws themselves. For example, bylaws can increase the quorum (the number of people who must be present for a vote to take place) or the voting requirement to a two-thirds majority instead of a simple majority.