When Should Company Bylaws Be Updated?

discussing company bylaws

It’s only natural for people to become set in their ways.

And grouping a bunch of people together into a collective (i.e., a board of directors), can increase the stubbornness tenfold.

It’s not entirely uncommon for organizations – starting at the top – to follow procedures because ‘that’s how they’ve always been done.’

No matter the procedure, organizations always need to assess their overall relevance, productivity, and efficiency. This focused, scrutinizing approach is what keeps leadership sharp and thinking towards the future. With a mindset focused on continual tweaks and improvements, businesses remain prepared for socio-economic and technological changes that could impact their industry.

The above notion extends to the various bylaws mandated by organizations.

Let’s take a closer look at the topic:

Are Bylaw Reviews Falling by the Wayside?

Most boards of directors have a specific committee tasked with overseeing the board’s adherence to policies and bylaws.

The committee needs to review the company’s bylaws every two years, at least. If a board wishes to remain vigilant, one-year assessments would be more suitable.

Do Quorum Numbers Make Sense?

How many consenting board members does it require for a motion to be passed? Or in other words, any given member must know the board’s quorum number.

It doesn’t necessarily have to be the standard half-plus-one voter ratio. In fact, it might suit the needs of the business for the numbers to be more skewed. Perhaps some boards would benefit from a 100% ‘yes’ vote, for instance.

Boards must continually assess if their quorum suits the unique inclinations of their organization.

Are All Committees Still Relevant?

When a business is young, it’s going to require specific structures that don’t necessarily fit the mold as it grows and matures.

For instance, during an organization’s infancy, a board of directors will require a committee strictly focused on nominations. Whereas when the company finds itself a little longer in the tooth and the board is more established, a committee centered only around nominations makes less sense. As such, a broader governance-based committee will be utilized instead and charged with a more diverse array of responsibilities, (including the review of company bylaws).

Do the Listed Officers Align with the Organization’s Current Status and Identity?

The basic officer list in a company’s bylaws generally involves a president, chairperson, treasurer, and secretary. Though, other organizations (specifically those with leadership development in mind) will put vice presidents on that list. Alternatively, many companies don’t think it’s necessary to add any extra officers to their bylaws, sticking with the bare bones.

Like the other factors discussed on this list, reviewing this facet of a board of directors’ bylaws depends on what ground the company currently stands.

Do the Bylaws Implement Term Limits?

A board that requires consistency and long-term stability won’t be overly interested in term limits. They’d rely on the same members for as long as possible.

Conversely, other boards who are eager to change with the times will implement term limits.

A board in need of some fresh blood but with no term limit, may need to contemplate a change in its bylaws.

If it’s been a long time since your last bylaw review, don’t waste any more time! Schedule a bylaw review today.