It May be Time to Amend Your Bylaws

Many companies have bylaws, but they are collecting dust. They have not been looked at in many years or revised, and many higher level owners or operators of the business may not even have any idea what they exactly say.

Now is the time to look at them and make necessary revisions. Some will be obvious; the changing times and technologies will show you where your bylaws may be obsolete.

Harmony Between Bylaws and Real Life

How are you actually running your business today? In other words, when reviewing your bylaws, and considering amendments and revisions to them, give thought to how your business is actually operating.

For example, are you allowing people to attend board meetings virtually or by Zoom/online methods? Are you allowing proxy votes? If that’s working for you, and your Bylaws don’t specifically allow those things, it may be time to amend in a way that lines up with how your business is operating.

Voting Issues

There are a lot of issues to consider in the voting procedure. Some of them may include:

• Do your bylaws provide for blind or anonymous voting and when? This can be helpful for more sensitive matters that a board needs to vote on
• Do your bylaws have a voting process, when there is an emergency, and there may not be a quorum, or board members may be unavailable?
• Is there a recusal provision, where Board members are prohibited from voting on matters where they may have a personal interest in the matter, or a conflict of interest?
• Are there provisions for times when you may have Board vacancies, and thus, the possibility of tie votes
• Do you allow proxy voting?

Selection and Removal of Officers and Board Members

It may be time to review both board members and officer positions, and how they are both selected, approved of, and removed. You do want the Board to have some input, but you also can’t have a Board of Directors micromanaging the day to day hirings and firings of the company.

Passing of Ownership

What do the bylaws say about someone’s status as a shareholder being passed on involuntarily, for example transferred through a bankruptcy or a divorce? Many bylaws overlook how to handle this situation, but without addressing it the company could be stuck with a shareholder or director it doesn’t want to work with.

The Nature of the Business

Many bylaws authorize a company to conduct “any and all business,” or some other generic phrase. But if not, and if you’re looking to expand the business one day, you may want to expand the business that the company is legally allowed to engage in, as written in the Bylaws.

Amending Bylaws

Speaking of amending the bylaws, do the bylaws actually say how the bylaws themselves are amended? Many do not. You want a balance between difficult enough that Bylaws aren’t always being changed, but easy enough that you have the flexibility you need to amend the Bylaws and grow.

Call the West Palm Beach business law attorneys at Pike & Lustig to help you amend or change your bylaws in a way that best works for your business.

Source:

se4nonprofits.com/blog/five-nonprofit-bylaws-issues-that-are-often-overlooked