Explanation for the purpose of By-Laws and when it becomes imperative for the Shareholders to memorialize how the corporation will be managed.
When a corporation is controlled by a single shareholder, it would seem that there would be little purpose in preparing formal By-Laws. However, according to Nevada corporate law, (NRS 78), a certified copy of the By-Laws of the corporation is an official record of a corporation, the By-laws are certified in the minutes of the corporation.
When there are multiple shareholders it become imperative that By-Laws are drawn with specific instruction on specific provisions to define and ensure the rights of the shareholders, i.e. when, where and perhaps why shareholders meet and vote, the powers and/or limitations to bestow on Directors, and how the Directors will conduct business on behalf of the shareholders. There should also be specific explanations controlling officers/managers of the corporation.
Sample By-Laws are provided by NFH, but may be of little help for a shareholder with minimal legal training. NFH has prepared a substantial multiple choice check-list which allows the Shareholder(s) to both customize and formalize their By-laws according to their particular needs. We also recommend when said By-Laws are prepared, Minutes be drawn which document the meeting in which the By-laws are adopted.
