Corporations are independent legal business entities that operate subject to a series of rules. While corporations do not have a constitution, they have articles of incorporation and bylaws. These sets of rules define how the corporation is to be run and the different roles of the shareholders, directors and corporate officers. However, business circumstances may change, requiring a corporation’s rules to be amended.
Refer to the articles of incorporation. The articles of incorporation are the most important set of internal rules and establish the company’s name, registered agent, address, business purpose and how many shares of stock it may issue. Determine if any of the changes you wish to make are included in the articles.
Read More: How to Change the Nature of Business for a Corporation
Review the existing bylaws. The bylaws are the next set of internal rules that a corporation follows. Bylaws generally focus on the administrative portion of the business. This includes how to call meetings, elect directors, appoint corporate officers, and the responsibilities of different positions within the corporation.
Request a meeting of the board of directors. The bylaws should contain a procedure regarding how to call a meeting of the board, so refer to that document and follow it exactly. Most corporations have at least annual meetings scheduled. If this meeting is to take place before a scheduled meeting, most states require that you provide all the directors with notice so they can attend. However, you may not be required to provide notice if all of the directors who are entitled to vote attend the meeting or if the absent directors provide a “waiver of notice” to the corporation. Also, make sure that an authorized party, such as the chairman or president, calls the meeting.
Hold a vote of the board of directors on the amendment. The bylaws may provide a minimum vote total regarding what is required for an amendment to pass. Generally, only a majority is required. Be sure to keep accurate minutes of the meeting, as most states require these records to be kept. The minutes should contain a copy of the amendment, whether the amendment was approved by the board, and the vote tally. Generally, the minutes must be signed by the Secretary of the corporation.
Request a meeting of the shareholders. Again, notice is required. Be sure to send a notice to all shareholders, along with a an agenda and copy of the proposed changes.
Hold a shareholder vote. Make sure a quorum, or minimum number of members required to be present to vote on a matter, is present at the meeting. Again, the bylaws may define how many votes are necessary to approve an amendment. You will also need to prepare minutes containing who was present, a copy of the amendment, whether the amendment passed and vote tally. Generally, the minutes must be signed by the Secretary of the corporation.
File a copy of the amended articles of incorporation with the state where the business incorporated if it has been altered. States generally require that updated articles of incorporation be filed with the appropriate government office. Generally, the office is the Secretary of State. The state will normally provide a form to help you file amended articles of incorporation. You may be asked to pay a fee. Amended bylaws generally do not need to be filed with the state.
John Cromwell specializes in financial, legal and small business issues. Cromwell holds a bachelor's and master's degree in accounting, as well as a Juris Doctor. He is currently a co-founder of two businesses.