Delaware corporate bylaws delineate the internal framework and operational protocols for corporations registered in the state. They address the roles and responsibilities of corporate officers and directors, protocols for shareholder meetings, voting procedures, dividend distribution policies, and the handling of corporate assets.
These bylaws are drafted during the incorporation process, requiring formal approval by the corporation’s board of directors and shareholders. Unlike articles of incorporation, these internal documents do not require filing with the Secretary of State. They serve as a reference in resolving internal disputes and addressing matters involving external parties.
Legal Requirements
According to state law, corporations may, but are not required to establish bylaws. Having corporate bylaws, however, is strongly recommended. [1] Additionally, it’s important to consider several other legal requirements when drafting the bylaws for your corporation:
- Annual Meetings – May be held at a designated place determined by the board of directors or solely by remote communication, as authorized. [2]
- Corporate Bylaws – Can be adopted by incorporators, initial directors (if named in the certificate of incorporation), or the board of directors before receiving payments for stock. [3]
- Issuance of Stock – Shares may be issued for cash, tangible or intangible property, or other benefits, as specified in resolutions by the board, which can authorize multiple transactions at various times and amounts. The board’s judgment as to the value of a company’s stock is conclusive unless the price has been determined by fraud. [4]
Naming Considerations
- Required Words: “Association,” “Company,” “Corporation,” “Club,” “Foundation,” “Fund,” “Incorporated,” “Institute,” “Society,” “Union,” “Syndicate,” “Limited,” an abbreviation thereof, or language of like import (choose one).
- Prohibited Words: “Bank,” or any variation, unless the business is a financial institution.
- Name Reservation Period: 120 days.
- Renewal Period: Renewable (for consecutive 120-day periods) upon payment of a $75 renewal fee for each period.
- Transferability: Yes.
Emergency Bylaws
Corporations can adopt emergency bylaws effective during various emergencies, such as attacks on the United States or areas where the entity operates, nuclear disasters, or pandemics, without the need for a quorum. They cover meeting protocols, succession plans, and necessary actions during emergencies.
Officers and directors acting under these bylaws are protected from liability, and regular bylaws that are not inconsistent with the emergency bylaws will remain in effect during the emergency. [5]
