Corporate Bylaws Law in the United States

Corporate bylaws are not legally required in most states, but without them your corporation may face operational paralysis, lender rejection, and investor due diligence failures. When adopted, bylaws must be consistent with state corporate statutes and the certificate of incorporation, and they cannot include provisions that impose liability on stockholders for attorneys' fees in internal corporate claims or that conflict with mandatory statutory rules like majority-vote director removal.

What must be included in corporate bylaws?

State law generally does not mandate specific content for corporate bylaws. However, practical required elements for functional governance include meeting procedures, quorum rules, director and officer roles, and amendment procedures. The only federal content requirements apply exclusively to organizations seeking 501(c)(3) tax-exempt status, and these apply to the organizing document (typically the articles of incorporation), not directly to bylaws (Treas. Reg. § 1.501(c)(3)-1(b)). A deficiency in the charter cannot be cured by the bylaws (IRS eotopicc85 (1985)).

What do corporate bylaws actually do?

Corporate bylaws are the internal governance rules that regulate how a corporation conducts its affairs. They serve as binding rules between the corporation and its stockholders (Boilermakers Local 154 Retirement Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch. 2013)). Bylaws typically address matters such as meeting procedures for stockholders and directors, quorum and voting requirements, director qualifications and board composition, officer roles, and amendment procedures.

Under Delaware law, bylaws "may contain any provision, not inconsistent with law or the certificate of incorporation, relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees" (8 Del. C. § 109(b)). The Nebraska Model Business Corporation Act similarly permits bylaws to "contain any provision not inconsistent with law or the articles of incorporation" (Neb. Rev. Stat. § 21-224).

Are there any required provisions in corporate bylaws?

No single federal or state statute prescribes specific clauses that must be in the bylaws of all corporations, except for 501(c)(3) tax-exempt organizations. For these entities, the organizing document—typically the articles of incorporation—must satisfy the IRS organizational test. Required elements include a purpose limitation restricting activities to exempt purposes, a nondistribution constraint prohibiting private inurement, and a dissolution provision dedicating assets permanently to exempt purposes (Treas. Reg. § 1.501(c)(3)-1(b)).

A sample IRS-suggested dissolution clause is: "Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of IRC Section 501(c)(3), or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose."

While bylaws alone can serve as organizing documents, they must include "name, purpose, signatures, and intent to form an organization" (IRS Publication 557 (Rev. January 2025)).

Can I write my own corporate bylaws?

Yes, you can draft your own bylaws, and many corporations use templates or DIY services. However, bylaws are binding legal documents that must comply with your state's corporation law and your certificate of incorporation. Using a generic template risks creating provisions that are unenforceable, conflict with state law, or fail to address your corporation's specific needs. Legal review is advisable, especially for provisions involving director elections, shareholder rights, indemnification, or complex governance structures.

Prohibited and unenforceable terms

Several categories of bylaw provisions are facially invalid or unenforceable under Delaware law, which shapes the national baseline:

Fee-Shifting Provisions

Delaware law contains an absolute prohibition: bylaws "may NOT contain any provision that would impose liability on a stockholder for the attorneys' fees or expenses of the corporation or any other party in connection with an internal corporate claim (as defined in § 115) or in connection with any other claim that a stockholder, acting in its capacity as a stockholder or in the right of the corporation, has brought in an action, suit or proceeding" (8 Del. C. § 109(b)). In John Solak v. Paylocity Holding Corporation, C.A., 153 A.3d 729 (Del. Ch. 2016), the Court of Chancery held such a fee-shifting bylaw facially invalid.

Supermajority Removal Requirements

Bylaws requiring more than a majority vote to remove directors violate 8 Del. C. § 141(k), which provides that "any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote." In Harold Frechter v. Dawn M. Zier, et al., C.A. No. 12038-VCG (Del. Ch. Jan. 24, 2017), the court rejected the argument that general voting flexibility permitted override of this mandatory removal standard.

Unintelligible Provisions

Structural defects can render bylaws facially invalid.

Provisions Interfering with Shareholder Voting

Board-adopted bylaws during proxy contests face enhanced scrutiny.

Critical placement limitations

Certain provisions must be in the certificate of incorporation and cannot be established by bylaws alone:

The 2022 amendment to § 102(b)(7) extends exculpation to the president, CEO, COO, CFO, CLO, controller, treasurer, chief accounting officer, named executive officers, and other individuals who have agreed to be identified as officers—but excludes breaches of loyalty, bad faith, intentional misconduct, knowing law violations, improper personal benefits, and derivative claims for officers.

Who can adopt and amend bylaws?

State statutes allocate amendment authority differently. The following table shows key rules for common incorporation states:

Special procedural restrictions apply to bylaws increasing quorum or voting requirements: under Virginia and Nebraska law, if originally adopted by shareholders, they may be amended only by shareholders (unless the bylaw provides otherwise); if adopted by the board, either shareholders or the board may amend, but the board must meet the very quorum and voting threshold it seeks to change (Virginia Code § 13.1-715.C; Neb. Rev. Stat. § 21-2,160).

What happens if bylaws conflict with articles of incorporation?

Bylaws must be consistent with applicable law and the certificate of incorporation (8 Del. C. § 109(b); Neb. Rev. Stat. § 21-224). In any conflict, the articles of incorporation control. This hierarchy means a bylaw provision that violates the charter is unenforceable, potentially leading to litigation and claims of breach of fiduciary duty by directors who attempt to enforce it. Any provision permitted in bylaws may instead be placed in the certificate of incorporation (8 Del. C. § 102(b)(1)).

Enforceability factors

Contractual Validity

Bylaws are presumptively valid as contractual terms (Boilermakers). Forum selection bylaws, for example, are facially valid; as-applied challenges to reasonableness are litigated when actually invoked, not in facial challenge.

Vested Rights Protection

Indemnification and advancement rights arising under certificate or bylaw shall not be eliminated or impaired by amendment after the act or omission occurred, unless the original provision explicitly authorized such impairment (8 Del. C. § 145(f)).

Reasonableness Review

Minnesota common law establishes that "all bylaws must be fair and reasonable," and a court may review reasonableness if injury is alleged (Brennan v. Minneapolis Society for the Blind, Inc., 282 N.W.2d 515 (1979)).

Federal securities law interface

SEC proxy rules establish procedural floors that interact with, but do not displace, state bylaw provisions:

• Rule 14a-8: Companies may exclude shareholder proposals "improper under state law" (17 C.F.R. § 240.14a-8(i)(1))
• Rule 14a-19: Minimum 60-day notice period for director nominations; 67% solicitation floor; "duly nominated" standard requiring compliance with state law and governing documents (17 C.F.R. § 240.14a-19). Companies may enforce longer periods in their governing documents.

Note: SEC Rule 14a-11 was vacated by the D.C. Circuit in 2011 (Business Roundtable v. SEC, 647 F.3d 1144) and is no longer in effect. Shareholders seeking nomination rights must rely on company-specific bylaw provisions or state law.

The SEC has characterized mandatory arbitration bylaws for federal securities claims as "complex" and "unsettled" under both federal and state law.

Because these rules depend on your specific corporate structure and state of incorporation, Ask Sawyer researches federal and state law to answer questions about your facts.

Emergency bylaws

Several jurisdictions explicitly authorize emergency bylaws effective during catastrophic events preventing normal quorum assembly:

Emergency bylaws may address modified meeting procedures, adjusted quorum requirements, and designation of substitute directors. They must be consistent with any conditions or shareholder approval requirements in the charter.

Common drafting pitfalls

Practical recommendations

When drafting or reviewing bylaws, ensure:

• Consistency: No conflict with certificate of incorporation or applicable state law
• Clarity: Avoid unintelligible structures; define terms precisely
• Proportionality: In proxy contest contexts, avoid provisions that are preclusive or coercive
• Proper placement: Keep officer exculpation in the certificate, not bylaws
• Reasonable advance notice: Information requirements that are neither minimal nor excessive
• Preservation of shareholder rights: Respect mandatory statutory voting and removal standards

For fact-specific analysis of whether your advance notice or forum selection bylaws comply with Delaware and MBCA standards, Ask Sawyer provides research on federal and state corporate governance requirements.