COMMENT

Source: Model Statutory Close Corporation Supplement, § 22. There were no comparable provisions in former law. Former § 14-2-176(a) required the board of directors to adopt initial bylaws.

The purpose of bylaws is to provide regulations for the management of a corporation. Business corporation statutes universally require that a corporation adopt bylaws. See Section 14-2-206. Very few, however, specify more than a few mandatory provisions that must be included in the bylaws. For example, under the Code, the mandatory requirements are: (1) the time and place of shareholder meetings (Sections 14-2-701 and 702); (2) the number of directors, which may, alternatively, be set in the articles of incorporation (Section 14-2-803); and (3) the identity, method of election, and authority of the officers (Sections 14-2-840 and 841). Moreover, under Section 14-2-206 any provision required or permitted to be in the bylaws may be placed in the articles of incorporation.

This section gives a statutory close corporation the option to dispense with bylaws, if the matters required by statute to be included in bylaws are contained in either a Section 14-2-922 shareholder agreement or in the articles of incorporation.

Cross-References Articles of incorporation: amendment, see § 14-2-1001 et seq.; generally, see § 14-2-202. Bylaws: adoption of initial bylaws, see §§ 14-2-205 &14-2-206; amendment, see § 14-2-1020 et seq.; contents, see § 14-2-206. Shareholder agreement, see § 14-2-920. Termination of statutory close corporation status, see § 14-2-931.

RESEARCH REFERENCES