There are a lot of things that go into setting up a business in Missouri. You have to choose a business structure, come up with a name, and register with the state. But one thing that often gets overlooked is corporate bylaws. These legal rules are the foundation of any corporation, and they explain how owners will run the business.
Understanding corporate bylaws
Bylaws are a set of rules governing the internal affairs or organization of a corporation. They detail the number and type of board members, how to conduct meetings and voting procedures. Bylaws also define corporate powers, duties of officers, indemnification provisions for directors and officers, dividend policy, capital structure, issuing stock certificates, filling vacancies on the board of directors, adopting budgets and other important decisions.
Reasons why you need them
Having bylaws in place is essential in providing governance for the company’s financial matters and ownership rights within the organization. They also allow business owners to articulate expectations and protect the company from potential legal liabilities. Bylaws can also serve as a reference guide for a corporation when officers or board members are unsure of their responsibilities or need clarification on any matter.
In Missouri, corporate bylaws usually follow a standard format that includes an introduction, articles of incorporation, and other pertinent provisions. Each section should be specific to your business and explain all aspects in detail. The creation process requires more than just filling out forms – it requires strategic thinking and legal expertise to ensure compliance with state corporate/business law and regulations and that the document accurately reflects the purpose of the organization.
Once drafted, you must review corporate bylaws thoroughly to make sure they comply with the company’s purpose and goals and the laws of the state. Each director or officer must sign it as an acknowledgment that they agree to abide by them. You should keep the original copies in a secure location, whether it’s with an attorney or within the business itself.