Have You Reviewed Your Business’ Bylaws?

This happens all the time: Someone starts a business, and gets all their paperwork in order, including their bylaws. Then time goes on, things change, both in life, technology and your business…and yet, your bylaws remain the same. And one day, they simply don’t meet your needs.

It may be time to look at your Bylaws, and give them, as they say, a spring cleaning or a refresher.

Look at Your Business Today

One thing to ask yourself is how you run your business, and do your bylaws reflect the actual way that you run your business.

This problem can happen with changing technology—many businesses bylaws don’t even allow voting by phone, or attendance at meetings by videoconferencing, or allow for e-signatures—even if, practically, that’s how the company is actually running.

Some bylaws may specifically name or reference business addressees you no longer use, or officers, who are long gone from the company.

 How Do You Amend The Bylaws?

The first hurdle in amending your bylaws, is reading the bylaws themselves, to see how they are amended.

Some provide for a relatively easy process, but others do not. Want to make them easier? Well, you may have to amend your bylaws to allow you to amend them easier, as confusing as that sounds.

Filling in the Blanks

You may look at your bylaws, and find that it’s not that they’re out of date, but instead, that they’re just incomplete. Many businesses, in a rush to get going when they start out, only pass the most bare bones bylaws that they can.

You may find that your bylaws do not account for, say, emergency procedures, or proxy voting, or blind voting. They may not address what happens when there are tie votes, or whether directors with conflicts of interest need to recuse themselves from voting.

Do your bylaws address how new directors are appointed—or how directors are removed?

Most bylaws say that there must be a quorum to get business done, but what if there is an emergency—are there some kinds of voting that can be done in the absence of a quorum?

Transfer of Shares

Bylaws should also address what happens when someone who owns shares in your company, no longer owns those shares. That can happen through things like death or divorce.

Many companies provide for a buyback provision, where the company has the right to purchase the shares from the new owner, to avoid having unwanted shareholders, but if that is included, your bylaws will also have to say how those shares are valued.

 What’s the Purpose of the Business?

You may also want to take a look at the stated purpose of the business. The more general—such as saying that the company can engage in “any and all lawful business,” may seem overly broad but if you’re expanding into different industries or markets, that may give you the flexibility that you need to do just that.

Need help with your company bylaws? Call our Fort Lauderdale business attorneys at Sweeney Law P.A. at 954-440-3993 for help.

Source:

se4nonprofits.com/blog/five-nonprofit-bylaws-issues-that-are-often-overlooked