Things You Didn’t Know About Corporate Bylaws
If you start a business, you’re probably doing it because that’s the business you want to get into, and so that you can use your business skills for a profit. You didn’t go into business to draft paperwork, including bylaws.
You’ve heard of bylaws, and people have said you need them, but there are some things you may not know about bylaws in Florida.
They Are Necessary
You do have to draft bylaws, if you have a Florida corporation. However, these bylaws aren’t filed with the state. Who drafts the bylaws depends on your Articles of Incorporation, which will state whether incorporators draft the bylaws, or whether shareholders draft the initial bylaws.
The bylaws themselves, once drafted and approved, will say how they are amended later on.
You can include anything you want in your bylaws, and do whatever you want in the bylaws, so long as your bylaws don’t expressly conflict with Florida statutes.
People Will See Them
So you think bylaws are just a document you’ll draft, and then nobody will ever see them again? Think again. The bylaws are your rules, and the outside world, as well as a court, if litigation is ever necessary, will look to your bylaws if there is a dispute.
Your bylaws will tell you what is legal, and what you can and cannot do. Conversely, they will also tell a court if you did something illegal, or unauthorized, if something you do is challenged.
Not only will courts look at your bylaws, but lenders, investors or banks will also, if you are in need of loans or investments. They will look to see that you are an authorized corporation, that the investment or loan you are making is authorized and allowed—and to see that you are an established legitimate company.
Have you thought of what would happen in the event of an emergency? Civil unrest, a hurricane, another pandemic, or anything similar? Anytime you cannot get a quorum in your board of directors, Florida law considers it an emergency, for corporate bylaw purposes.
How will your business operate? The good news is that Florida law specifically authorizes your company to approve separate bylaws that only come into play when the emergency starts, and which become ineffective once the emergency is over.
Keeping Your Business
It’s easier than you think to lose your business. Anytime there is a deadlock, a director or shareholder or owner could petition the court to resolve the deadlock but in more serious situations, they could also petition a court to dissolve the company. And yes, it does happen that you have an even number of voting directors or shareholders.
But good, comprehensive bylaws say how a deadlock is resolved, even if there is not an odd number of voting members. Following the bylaws can get the deadlock resolved, without resorting to a court.
Call our West Palm Beach business litigation lawyers at Pike & Lustig today if you are starting a business and need help with your corporate paperwork.