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Key Facts
- Delaware state level: Corporate bylaws are internal governance rules that may address the corporation’s business, affairs, and the rights or powers of its stockholders, directors, officers, or employees.
- Delaware state level: A bylaw cannot conflict with Delaware law or the corporation’s certificate of incorporation.
- Delaware state level: Voting stockholders retain the power to adopt, amend, or repeal bylaws after the corporation has received payment for stock, even when the certificate also gives that power to the board.
- Delaware state level: Bylaws commonly govern matters such as board size, officer roles, meeting arrangements, quorum rules, and voting procedures.
Bylaws are a corporation’s internal operating rules. For Delaware corporations, they sit inside a larger legal structure: the Delaware General Corporation Law, usually called the DGCL, controls first; the certificate of incorporation controls next; and the bylaws govern only within those boundaries.
What bylaws mean under Delaware law
Section 109 permits bylaws to regulate the corporation’s business, affairs, and the rights or powers of stockholders, directors, officers, or employees, but they may not contradict Delaware law or the certificate of incorporation.
This hierarchy distinguishes bylaws from articles of incorporation, called the certificate of incorporation in Delaware: the certificate is the public charter filed to create the corporation, while bylaws ordinarily operate as internal governance rules.
What corporate bylaws often cover
The DGCL identifies subjects that bylaws may address, including the number and qualifications of directors; officer titles, duties, selection, and terms; stockholder meeting arrangements; quorum and voting requirements within statutory limits; and procedures for board and committee meetings.
These rules translate the corporation’s charter and Delaware’s statutory framework into repeatable governance procedures, but they do not replace board resolutions, stockholder agreements, or the certificate.
Who can adopt or change Delaware bylaws
Before a stock corporation receives payment for stock, section 109 permits specified incorporators or initial directors to adopt, amend, or repeal bylaws; afterward, that power belongs to the stockholders entitled to vote.
The certificate may also give amendment power to the board without taking the stockholders’ power away, although section 216 prevents a board from later changing a stockholder-adopted bylaw that specifies the votes required to elect directors.
Why the certificate matters
A bylaw must be compared with the DGCL and the certificate because a lower-ranking governance rule cannot override either one.
Delaware permits some provisions that could appear in bylaws to be placed in the certificate instead, a choice that changes which statutory amendment procedure applies.
Are bylaws legally binding?
In the 2013 Boilermakers decision, the Court of Chancery described valid bylaws, the certificate, and the DGCL as a flexible, binding governance framework among a corporation and its internal participants.
A provision can still be challenged if it exceeds a proper bylaw subject, conflicts with the DGCL or certificate, or is applied unlawfully; civil actions concerning bylaw interpretation, enforcement, or validity may generally be brought in the Court of Chancery.
How stockholders can obtain current bylaws
Section 220 includes the bylaws then in effect within corporate books and records, and a stockholder seeking inspection must satisfy requirements that include a written demand under oath and a proper purpose.
Because authorized corporate action can change bylaws, an older copy may not state the rules in force for a later meeting, election, or governance dispute.
Bylaws and LLC operating agreements are different
These Title 8 provisions govern corporations, while a Delaware limited liability company is governed by a different statute and generally uses a limited liability company agreement or operating agreement rather than corporate bylaws.
Sources
- Delaware Code, Title 8, Subchapter I: formation and bylaws
- Delaware Code, Title 8, Subchapter IV: directors and officers
- Delaware Code, Title 8, Subchapter VII: meetings and voting
- Delaware Code, Title 8, Subchapter VIII: corporate books and records
- Delaware Court of Chancery, Boilermakers Local 154 Retirement Fund v. Chevron Corp.
- Delaware Legislative Council, current compiled Title 8
- Delaware Limited Liability Company Act, definitions
