Also known as: bylaw · bye-law · byelaw · by-laws · bylaws · local regulation
Written by attorneys · grounded in primary & secondary sources — see below
An internal rule or set of rules adopted by a corporation or common-interest association to govern its procedures, operations, and governance structure. Such rules must remain consistent with the articles of incorporation or declaration and applicable statutes. They address matters including director elections, meeting requirements, and expense reimbursements.
Benson Motors adopted a bylaw requiring reimbursement of shareholder proxy solicitation costs in director elections. After a contested election, shareholder Bradley Banks incurred expenses soliciting proxies and sought repayment. The corporation refused payment because the record date had preceded the bylaw's adoption. Banks sued to enforce the bylaw.
Shareholders of Brighton Manufacturing proposed amending a bylaw on proxy procedures to restrict the board's ability to add conditions. The board resisted, asserting authority to modify procedures for orderly elections. The shareholders claimed their amendment power overrode board discretion. Litigation followed over the scope of permissible bylaw changes.
Select any source to read its text and confirm it supports the definition.
Black & White Taxicab adopted a bylaw governing exclusive depot privileges. Brown & Yellow Taxicab challenged the bylaw as exceeding corporate authority under state law. The court examined whether the bylaw conflicted with the company's charter powers. The dispute turned on the validity of the internal rule.
A homeowners association enacted a bylaw restricting lot development to preserve coastal areas. Lucas purchased property before the bylaw and claimed it deprived him of all economic use. The association defended the bylaw as a valid exercise of governing authority. The case addressed whether the restriction constituted a taking under the governing documents.
A school board corporation adopted a bylaw authorizing a moment of silence for meditation or voluntary prayer. Jaffree challenged the bylaw as an establishment of religion. The board argued the bylaw merely permitted individual choice. The litigation tested the bylaw's constitutionality under the First Amendment.
A laundry business corporation enacted a bylaw regulating operations that disproportionately affected Chinese-owned businesses. Yick Wo operated a laundry denied a permit under the bylaw. He challenged the bylaw as violating equal protection. The case examined whether the internal regulatory rule was applied discriminatorily.
The incorporators or the board of directors must adopt the initial bylaws. Investors or shareholders acting without authority cannot validly adopt them before the board is constituted.
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A bylaw requiring reimbursement of shareholder proxy expenses applies only to elections for which the record date follows its adoption. It cannot retroactively govern prior elections.
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Shareholders may not limit the board's authority to amend or repeal conditions or procedures in bylaws concerning proxy solicitations when doing so would prevent a reasonable and orderly process.
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Bylaws must not conflict with the articles. Provisions raising vote thresholds or narrowing director eligibility beyond what the articles allow are unenforceable.
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…controlling distinction in the past. "Nor can it make any difference that the right is purchased previous to the passage of the by-law," for "[e]very right, from an absolute ownership in property, down to a mere easement, is purchased and holden subject to the restriction, that it shall be so exercised as not to injure…