A company’s bylaws set forth the rules that regulate the operations of the business and establish guidelines and procedures for the board. The bylaws work hand-in-hand with the company’s certificate of incorporation. The bylaws cover a number of topics relating to the internal management of the corporation, including procedures for shareholder meetings and the powers and duties of directors and officers.

Bylaws typically contain many provisions about the formalities concerning shareholder meetings. The bylaws will specify that an annual meeting of shareholders shall be held annually at a date and time set by the board of directors. It also states that special meetings of shareholders can be called by the board at the request of shareholders holdings at least a certain percentage of the outstanding stock of the company. The board may refuse to call a special meeting if the request relates to an item of business that is not a proper subject for shareholder action under the state’s business law. A notice of the special meeting should be provided to stockholders of record entitled to vote at such meeting.

At shareholder meetings, most matters are decided by the affirmative vote of a majority of the shareholders entitled to vote. The election of directors is often decided by a plurality of the votes cast. The bylaws may specify that the board must appoint an inspector of elections to preside at the meeting to count all the votes and provide written certification of the voting results.

Another section of the bylaws will set forth guidelines with respect to the board of directors, such as procedures for the nomination of directors, their term of office, and procedures for the removal of directors. Directors are generally elected at each annual meeting of shareholders to hold office until the next annual meeting of shareholders. A director can resign by providing written notice to the board, the Chief Executive Officer, or the board chairperson.

Among other powers, the board has the authority to fix the compensation of the directors. Depending on how the bylaws are drafted, the board may also have the authority to fix the compensation of certain officers and employees of the company. Such compensation may include salary, bonus, and stock options. The board is also authorized to delegate such authority to the board’s compensation committee.

In accordance with the bylaws, the board may establish board committees consisting of at least two members. The board committees are typically governed by the same rules with respect to meeting procedures. Board committees may exercise many of the same powers as the full board, except board committees may not act alone to amend the certificate of incorporation, amend the bylaws, approve a dividend payment, and such other actions that are specifically enumerated in the bylaws.

Another section of the bylaws will cover the officers of the corporation. This section will often start by outlining the various officer positions. It may state that the executive officers of the corporation include a Chief Executive Officer, one or more Presidents, one or more Vice Presidents, a Secretary, a Treasurer, and such other positions as the board may determine from time to time. The bylaws will broadly outline the responsibilities of the Chief Executive Officer, including that such individual shall exert general management and control over the company’s business affairs and policies. The officers shall hold office until a successor is elected or the officer resigns.

The bylaws are typically a longer document than the certificate of incorporation. They should be read together with the company’s certificate of incorporation and the provisions should be consistent in both documents.