Also known as: bylaws · by-law · by-laws · bylaw's · bylaws' · corporate bylaw
Written by attorneys · grounded in primary & secondary sources — see below
A rule or administrative provision adopted by an organization for its internal governance and its external dealings. The provision is subordinate to a charter or articles of incorporation. It supplies procedures for matters such as director elections, proxy solicitations, and indemnification.
Birchwood Apparel's bylaws required the corporation to reimburse a shareholder who successfully solicited proxies in a contested director election. After the shareholder incurred substantial printing and mailing costs and prevailed, the board refused payment. The shareholder sued, and the court ordered reimbursement because the bylaw condition had been satisfied.
Bayside Shipping shareholders adopted a bylaw imposing new procedures on proxy expense reimbursement. The bylaw attempted to bar the board from later changing those procedures. The board amended the procedures anyway, and a court upheld the amendment because shareholders cannot strip the board of authority to maintain an orderly process.
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Blue Horizon Industries operated under a legislative charter authorizing bylaws for corporate governance. A competitor argued that a bylaw restricting certain routes violated the charter. The court examined the bylaw against the charter language and found no repugnancy, so the bylaw remained enforceable.
Boreal Energy's trade association adopted a bylaw barring members who engaged in certain hiring practices. A member challenged the bylaw as overbroad. The court reviewed the bylaw under the association's governing documents and upheld it as a valid internal governance measure.
Bella Barnes belonged to a religious corporation whose bylaws required members to contribute to building maintenance. Barnes refused payment and claimed the bylaw violated her rights. The court enforced the bylaw because it was a permissible internal rule of the organization.
Bianca Baker, a minority shareholder of Birchwood Apparel, received a proxy statement that omitted material facts about a merger. The corporation's bylaws required disclosure of board reasons for the transaction. Baker sued under federal proxy rules, and the court held the omission actionable because the bylaw created an expectation of accurate disclosure.
Under the Model Business Corporation Act, only the incorporators or the board of directors may adopt initial bylaws. Investors or shareholders acting without those actors lack authority, so any bylaws they purport to adopt are invalid.
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Bylaw provisions are invalid if they conflict with the articles of incorporation. A bylaw requiring unanimous board consent for mergers contradicts an article authorizing majority action, rendering the bylaw unenforceable.
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Yes. Corporate statutes permit a corporation to indemnify and advance expenses to an officer who is a party to a proceeding because of the officer's status, and bylaws commonly supply that authority within statutory limits.
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No. Shareholders adopting a bylaw on proxy expense reimbursement may not restrict the board's authority to amend procedures for a reasonable and orderly process.
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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…