Skip to main content

Corporate By-Laws: What Are They All About?

By June 3, 2015October 21st, 2021Corporate

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:

  • Issuance of shares: section 23(1)
  • Meetings by electronic means: section 94(2)
  • Quorum at a shareholder meeting: section 101(1)
  • Manner of voting at shareholder meetings: section 103(1)
  • Calling of shareholder meeting: section 105(5)
  • Making, amending, or repealing the by-laws of the corporation that regulate the business and affairs of the corporation: section 116
  • The location of a meeting of the board of directors: section 126(2)
  • Quorum at a director meeting: section 126(3)
  • Notice for director meeting: section 126(9)
  • The designation and appointment of officers and their respective duties: section 133
  • Remuneration of directors: section 137

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. Here is a non-exhaustive list of the types of specific bylaws which a corporation could have:

  • Indemnification of Directors and Officers
  • Authorizing Borrowing
  • Election of Directors
  • Meetings of Committees
  • Officers (e.g. title, roles and responsibilities)
  • Retirement of Directors
  • Maintaining a Shareholder Registry
  • Confirmation of Share Ownership
  • Appointment and Compensation of Auditor

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.

DMC