So what are the bylaws? Why are they important? What can they be used for? Basically, if you think of a corporation as a separate legal person from its owners and managers, but which requires some human actor to do things on its behalf, then it becomes clear why you need bylaws: in order to authorize those human actors to do things on behalf of the corporation.
I often tell clients that a bylaw is a procedural document that gives power or authority to the board of directors and officers to do things or not do things in respect of the corporation. Imagine that they are the internal rules that govern the corporation’s day-to-day operations. They generally deal with things like director and shareholder meetings (notice, quorum, split votes, electronic vs. in person, proxies, minutes, etc.), banking requirements (e.g. one director can open up a Canadian bank account on behalf of the corporation and sign cheques, etc.), and the roles and responsibilities of officers (e.g. president, vice-president, secretary, treasurer, etc.).
Indeed, the Ontario Business Corporations Act even provides for a set of rules that generally govern corporations, but which are SUBJECT to what the by-laws of the corporation say. These include things like:
Generally, when a corporation is established, there will be a general bylaw governing these typical things. But sometimes a special bylaw may be required – for example, to deal with things like banking or borrowing in the name of the corporation.
Bylaws are proposed in draft form by the directors of the corporation and need to be approved by the shareholders at a shareholder’s meeting in order to be approved.
Here is a non-exhaustive list of the types of specific bylaws which a corporation could have:
Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice, contact me (Michael Carabash) or David Mayzel or Ljubica Durlovska.
David Mayzel is your legal risk manager. He is a trained courtroom lawyer and has spent many years resolving disputes both in and out of court. He knows how to prepare documents and execute transactions in a way that avoids or mitigates legal risks. He can be reached at 416.528.5280. or email@example.com.
Michael Carabash is your business law adviser. He is an entrepreneur at heart who helps you see the big legal picture. He drafts clear and effective agreements that protect your rights while promoting your interests. He can be reached at 647.680.9530. or firstname.lastname@example.org.
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