By laws:

What are the bylaws?

Bylaws are actually the rules and regulations of a corporation. These rules that will direct the affairs the
corporation. These rules that will govern the stockholders, directors, officers or those managing the
affairs of the corporation.

We should not confuse the bylaws with our articles of incorporation. The AOI actually serves as the
fundamental law of the corporation while the bylaws are the rules and regulations adopted by the
corporation.

Also, the AOI is made before the incorporation of a corporation. While the bylaws are usually made after
the incorporation, and we also called a condition subsequent.

Can we view bylaws as a contract?

The answer is yes. It can be viewed as a contract between the corporation and the stockholders.

What do we see in the bylaws?

We see in the bylaws details that are not important enough to be place in the AOI but important enough
in writing as a guiding tool in directing the affairs of the corporation.

What is the function of a bylaws?

The function of a bylaws is to define the rights and duties of the stockholders, members, directors,
trustees and officers.

When does a corporation adopt its bylaws?

You actually see that in section 45 on RCC. Section 45 tells us that the adoption of bylaws may be done
after or before the incorporation.

(READ THE ARTICLES)

The first paragraph tells us that after the incorporation of a corporation there is now a adoption of a
bylaws. It also tells us that the stockholders will be the one voting on the approval of the bylaws.

What is the required vote?

It should be the majority of the outstanding capital stock( stock corporation) and a at least majority of
the members (non-stock corporation)

After a majority of the outstanding capital stock or majority of the members have approved the bylaws.

What must be done next?

The section 45 tells us that the bylaws must be signed by the all the stockholder or members who have
approved and it must be kept in the principal place of business so that stockholder or members may be
able to inspect them during office hours.
What must be done also apart from that?

There must be also a submition of bylaws to the SEC. And the copy that will be submitted to the SEC
must be duly certified by majority of the directors or trustees and countersigned by the corporate
secretary.

We have mentioned earlier that by laws may be adopted even prior to incorporation and how is this
done?

This is done by submitting the bylaws together with the AOI. And the bylaws must be signed by all the
incorporators.

When are bylaws considered effective?

Section 45 tells us that when approved by the Securities and Exchange Commission.

Let’s read the third and last paragraph

(Read the last paragraphs)

So, what does that tells us?

Even if it has already been approved a tleast the majority of the outstanding capital stock or majority of
the members, the bylaws do not become effective unless there is a certification from the SEC that the
bylaws is iin accordance with law.

Moreover, the section 45 gives us enumeration of certain corporations, where before the SEC will
approve such bylaws, they have to submite a certification from appropriate government agency where
such certification will state that the bylaws are in accordance with certain special laws.

These corporations are:

1. Bank
2. Banking institution
3. Building and loan association
4. Trust company
5. Insurance company
6. Public utility
7. Educational institution
8. Other special corporations governed by special laws

What should we put in our bylaws?

The section 46 of the RCC gives us the enumeration of what we may put in the bylaws.

(Read section 46)

We should remember that the list under the section 46 is merely directory. In other words, if we miss
something in this list in our bylaws, it doesn’t make our bylaws invalid or ineffective. The list is merely a
guide for a corporation on what to put in the bylaws.
Once the bylaws are approved and there is a certification issued by the SEC that the bylaws is in
accordance with law.

Can we still amend the bylaws?

The section 47 tells us that yes.

(Read 47)

Section 47 tells us that like the first or original adoption of bylaws of the corporation, we would be
needing the approval or vote of at least the majority of the outstanding capital stock or vote of the
majority of the member if we want to amend the bylaws or repeal the existing bylaws or adopt a new
bylaws.

Another thing in section 47 is that it allows the power to amend, repeal or adopt new bylaws may be
delegated to the BOD/BOT.

How to delegate?

You will need the approval of atleast 2/3 of the outstanding capital stock or at least 2/3 of the members.

Stockholder-Majority

Delegate to the BOD or BOT- 2/3

Can they revoke the power they have delegated?

Yes. How?

They will have to vote on it again. A vote by the stockholders representing majority of the outstanding
capital; or a vote by majority of the members.

So what does it tells us?

It tells us that it is harder to delegate that power because a higher number of votes would be required. It
is atleast 2/3 while the revocation is easier because it only needs the majority.