What Are Bylaws and Resolutions?
Why do I need Bylaws and Resolutions?
In this audio snippet, you'll hear about:
- Guidelines and rules under which your company will operate
- Agreement that says how you're going to run the business
- Who gets what shares, procedures to change something, steps to dissolve company, steps to amend the name
- Rules for disagreements and resolving disputes
- Resolutions are initial appointments of directors, etc...
- Need them to open a bank account
- Shows bank you have the authority to open a bank account
Audio Transcript
Travis:
What are Bylaws and why do I need those?
Jake:
Bylaws and Resolutions are kind of the guidelines and rules under which
your company will operate. It's the agreement that says, "Here's how
we're going to run this business; here's how we're going to run this
company. Who's going to get what shares? What are the procedures that
we have to follow in order to change something? What are the steps that
we need to do to dissolve the company? What are the steps that we need
to do to amend the name?"
So
it really lays out some fair and –– especially if there's disagreement
between the parties –– what are the rules to resolve that dispute?
Travis:
So it's really kind of the over–arching document that controls the corporation.
Jake:
Exactly. Resolutions are the actions that have been authorized by the
initial incorporator –– which in many cases will be us –– to appoint
the directors, to start the bank account, to get credit cards, to get
lines of credit if necessary, to really start getting the business
going. So those two documents are required. In order to follow the
corporate formalities, you really need to have bylaws and resolutions
for your company. If you don't, that's a big no–no.
Travis:
Right. Now, I also understand that in order to even open a banking
account, you'll need to bring those into the bank with you, along with
your corporate documents.
Jake:
Yes. That's one of the ways that you are able to show the bank that you
have the authority to open up a bank account, is by saying, "In my
Bylaws, or in my Resolutions, I am authorized to open up a bank
account."
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