Bylaws are the rules and procedures for how a corporation will operate and be governed.
While corporations incorporated under the Illinois Business Corporations Act (BCA) must file their articles of incorporation with the Secretary of State, bylaws simply need to be drafted and maintained at the corporation’s principal place of business.
Below is a list of some issues about which you should consult with your fellow shareholders, partners, or members prior to or upon retaining counsel to draft your bylaws:
- How many directors will there be? What will the directors’ powers and authority be and how broad or limited do you want to make them? How will they be nominated and elected? Will there be required qualifications? How long will their terms be? Will there be a process for removing directors prior to the end of their term?
- How many board meetings will take place per year? Will there be other regular meetings or special meetings, and, if so, what is the process by which the board of directors can call those meetings into place?
- How will the board give notice about meetings or other events or incidents relating to the corporation or LLC?
- Can the board take any actions without meetings, without member approval, without unanimous consent of the board and or officers?
- Will directors be paid for their services?
- What officers will the corporation have, and what will their respective obligations and responsibilities be?
- Indemnification and Insurance. Will the corporation indemnify any directors or officers, and, if so, for what? What will be excluded?
- Compliance with the law. Bylaws must be drafted, and your corporation or LLC must operate in compliance with applicable state and federal laws. Are you aware of these laws and the impact they may have on your organization’s operations?
- What happens if the corporation needs more money?
When shareholder or member disputes erupt, the bylaws can provide a remedy for an aggrieved party. The courts will enforce properly drafted bylaws.
To speak to one of our lawyers, get in touch with us at (312) 223-1699 or email Thomas E. Patterson at firstname.lastname@example.org for more advice and information.