A nonprofit corporation should consider following a checklist for creating their bylaws. If you have questions or assistance in forming your bylaws, one of our nonprofit attorneys can help.
1. Basic Identifying Information
Bylaws set forth the name and location of the nonprofit corporation. The bylaws also list the corporation’s purpose, which must be consistent with the purpose outlined in its articles of incorporation.
Assuming that the corporation intends to qualify as a nonprofit corporation under 501(c)(3) of the federal tax code, the bylaws typically state that the corporation has an exclusively charitable, educational, or religious purpose. The bylaws also typically contain other statements indicating that it is compliant with all other requirements to maintain eligibility as a nonprofit organization under federal tax law.
2. Elections, Roles, and Terms of Directors and Officers
The bylaws can define a specific number of directors of the governing board of the nonprofit corporation. They can also define a maximum and/or a minimum number of directors to sit on the board and any other special qualifications for some or all directors. In addition, the bylaws describe how and when directors are elected, the length of their terms, and what happens if a director resigns or it is necessary to fill a vacancy. A process also may exist to remove a director for one reason or another.
The bylaws establish the different offices held by members of the board of directors, including roles such as president, vice-president, secretary, treasurer, and others. This document specifically defines the duties and responsibilities of each role. The bylaws also explain how directors are elected to these positions and the terms that they serve in these positions. Procedures likely exist for the resignation or termination of directors from these roles. Additionally, bylaws may establish certain committees to address specific issues and appoint directors to head or sit on these committees as needed.
Finally, bylaws address matters related to the indemnification of directors for actions of the corporation and/or its employees.
The bylaws define the number and frequency of meetings to be held. Provisions also outline how directors and the public, if applicable, receive notice of the meetings and when and how special meetings are called. Bylaws may also allow the scheduling of annual meetings to discuss annual matters such as budgets and annual reports.
Bylaws typically define who may vote, how many votes they have, and what happens if the vote is a tie. Provisions in the bylaws likely address the number of directors necessary to be present at the meetings to constitute a quorum or for voting to occur.
4. Amending the Bylaws
Bylaws also explain the procedures necessary for changing or modifying the bylaws. Amending the bylaws can be as simple as a majority vote at any regular directors’ meeting, or it can be a more complex procedure.
5. Dissolving the Nonprofit Corporation
The bylaws also generally address the situation in which a nonprofit corporation dissolves in terms of procedures for winding down its affairs. The winding down process typically involves handling outstanding financial issues and distributing remaining corporate assets.
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