Procedure for Changing Bylaws

By Megan M. Scanlon

Whether your company is for-profit or a nonprofit, chances are there will come a time when you will want to amend its bylaws, the internal guidelines and procedures that govern its operation. Following the proper amendment procedures is essential to adopting and later enforcing changes to this important corporate document.

First, Look Within

Start by looking within the bylaws themselves. Most bylaws contain an amendment provision that sets forth amendment requirements such as who is permitted to propose an amendment, who must vote on and approve the amendment, and any required notice periods and methods. Some corporations allow directors to amend bylaws -- unilaterally in most cases -- while reserving the amending of certain provisions for the members.

Check the Statute

If your bylaws are silent as far as how to amend, state law prevails. Each state has its own statutes governing nonprofit or non-stock business entities and these statutes contain amendment procedures that establish notice periods, methods and approval requirements. For example, some states might require the approval of a majority of the directors, while others might require the approval of two-thirds of its members. It is important to ensure you review the statute that governs your precise type of business entity. If state law has requirements that are more restrictive than those in your bylaws, state law prevails.

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Winning the Hearts and Minds

If your bylaws amendment requires the approval of your membership, gaining member support and encouraging members to vote is just as important as following procedural requirements. When providing members with a copy of the proposed amendment, include a communication from the board that clearly explains why the board believes the amendment is in the best interest of the organization. Break the amendment down into brief, easy-to-understand segments and explain the practical implications of adopting the amendment. Make voting on the amendment as easy as possible for the members, such as setting up a website where members can electronically submit their votes if your state law and/or corporate documents permit electronic voting.

Schedule a Meeting

Schedule a meeting at which to vote on the proposed bylaws amendment. Ensure you meet the requirements for providing notice of the meeting to the directors and members. Depending on the bylaws and state law, you can generally achieve a quorum of the members by counting those members who attend the meeting either in person or by proxy, so ensure that you distribute and collect proxies within the requisite time periods as well.

Attention to Details

When amending your bylaws, it is important to follow all procedural requirements closely. Not giving the requisite notice, failing to document the approval of the amendment with the proper corporate resolutions, or neglecting to reflect the amendment in the books and records of the organization can lead to the invalidation of the amendment if it is ever subject to challenge on procedural grounds.

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How to Change an LLC Operating Agreement for Washington State
 

References

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