What are bylaws? (Section 45 to 47, Revised Corporation Code)

Bylaws are the rules and regulations that direct the affairs of a corporation, governing stockholders and officers. They differ from Articles of Incorporation, which are the fundamental law of the corporation and are created before incorporation, whereas bylaws are typically adopted after incorporation.

Section 45 of the Revised Corporation Code states that bylaws can be adopted after or prior to incorporation. For adoption after incorporation, a majority vote of outstanding capital stock (for stock corporations) or members (for non-stock corporations) is required. The bylaws must be signed by approving parties, kept at the principal office for inspection, and submitted to the Securities and Exchange Commission (SEC) after certification by directors/trustees and the corporate secretary. If adopted prior to incorporation, bylaws must be submitted with the Articles of Incorporation and signed by all incorporators.

Bylaws become effective only upon certification by the SEC that they comply with the law. For certain corporations vested with public interest (e.g., banks, insurance companies), an additional certification from the appropriate government agency is required.

Section 46 provides a directory list of what bylaws may include, such as meeting procedures, quorum requirements, voting methods, director qualifications, election processes, officer terms, penalties for violations, and stock certificate issuance. This list is a guide and not exhaustive, emphasizing that the bylaws serve as internal rules for corporate governance.

Section 47 outlines the process for amending, repealing, or adopting new bylaws. A majority vote of the board of directors/trustees and a majority of outstanding capital stock or members is required. The power to amend or repeal bylaws can be delegated to the board of directors/trustees with a two-thirds vote of outstanding capital stock or members. This delegated power can be revoked by a simple majority vote of stockholders or members. Any amended or new bylaws must also be filed with and approved by the SEC to become effective.