In Canada, corporations are governed by both federal and provincial laws, including the Canada Business Corporations Act (CBCA) and the Ontario Business Corporations Act (OBCA). These laws provide a framework for how corporations should operate, but corporations may also create their own internal rules called bylaws. In this blog post, we’ll discuss the role of bylaws in a corporation, and how they are relevant for corporations in Toronto and Ontario.
What are Bylaws?
Bylaws are the rules and procedures that a corporation creates to govern its own internal affairs. They are typically created by the board of directors and approved by the shareholders. Bylaws can cover a wide range of topics, including:
- How directors are elected and removed
- How meetings are called and conducted
- How officers are appointed and removed
- How dividends are paid to shareholders
- How shares are issued and transferred
- How the corporation is dissolved
Why are Bylaws Important?
Bylaws are important because they provide a framework for how the corporation operates and how decisions are made. Bylaws can help to prevent disputes between shareholders and directors, and can provide clarity and consistency for all parties involved.
Bylaws can also be used to protect the interests of shareholders and the corporation. For example, bylaws can include provisions for how conflicts of interest are handled, how confidential information is protected, and how disputes between shareholders are resolved.
Bylaws and Compliance
Bylaws must comply with the relevant laws and regulations governing corporations. If a bylaw conflicts with the CBCA or the OBCA, the law will take precedence. It’s important for corporations to review their bylaws regularly to ensure they remain in compliance with the law.
In addition, corporations must file their bylaws with the relevant government agency. Bylaws are not public documents, but they can be requested by shareholders or other parties with a legitimate interest in the corporation.
Conclusion
Bylaws play an important role in how a corporation operates and make decisions. They provide a framework for governance and help to prevent disputes and conflicts. Corporations in Toronto and Ontario must ensure that their bylaws comply with the relevant laws and regulations, and review them regularly to ensure compliance. If you need help with drafting or reviewing your corporation’s bylaws, it’s important to seek legal advice to ensure that they are effective and compliant.