Difference Between Articles of Incorporation and Bylaws

The main difference between Articles of Incorporation and Bylaws is that Articles of Incorporation are formal documents filed with the state to legally create a corporation, whereas Bylaws are internal rules that govern how the corporation will operate.

What are Articles of Incorporation?

Articles of Incorporation, also known as a certificate of incorporation or corporate charter, are a set of formal documents filed with a state government to legally document the creation of a corporation. They usually include essential information about the business, such as its name, purpose, headquarters location, and the number of shares it can issue. Filing these documents is a mandatory step to legally register a corporation and gain recognition as a distinct legal entity.

What are Bylaws?

Bylaws are internal rules adopted by a corporation’s board of directors after it has been incorporated. These rules dictate how the corporation operates internally, including details such as the procedures for holding meetings, electing directors and officers, and managing finances. Bylaws are crucial for the smooth internal functioning of a corporation and provide a framework for governance and decision-making processes. Unlike Articles of Incorporation, bylaws are not filed with the state but are kept within the organization.

Key Differences Between Articles of Incorporation and Bylaws

1. Purpose: Articles of Incorporation create and document the legal existence of the corporation, while bylaws outline the internal governance and operational procedures.
2. Filing Requirement: Articles must be filed with the state government, whereas bylaws are strictly internal documents and are not filed with any governmental body.
3. Content: Articles contain basic details like the company name, address, and authorized shares, whereas bylaws are more comprehensive and detail-oriented, covering policies and procedures.
4. Legal Document Status: Articles of Incorporation are public records that signify the corporation’s legal formation. Bylaws serve as internal guidelines and are not accessible to the public.
5. Amendability: While both documents can be amended, changing the Articles often requires shareholder approval and filing amendments with the state. Bylaws amendments can usually be adopted by a board of directors without filing.
6. Scope: Articles are more foundational, laying the groundwork for the corporation’s existence. Bylaws are operational, focusing on daily governance.
7. Detail Level: Articles tend to be broad and straightforward, while bylaws are detailed and specific.
8. Initial Adoption: Articles are prepared and filed during the incorporation process. Bylaws are typically drafted and adopted during the first board meeting after incorporation.
9. Impact: Articles have a more significant impact on legal standing and compliance, while bylaws majorly impact internal operations and governance.
10. Legal Authority: Articles are usually subject to state corporate statutes, whereas bylaws are devised based on the corporation’s requirements and business judgment.

Key Similarities Between Articles of Incorporation and Bylaws

1. Corporate Compliance: Both documents are vital for adhering to corporate formalities and legality requirements.
2. Governance: Each plays a significant role in the establishment and governance of the corporation.
3. Longevity: Both are intended to guide the corporation throughout its existence.
4. Foundational Documents: Both are considered fundamental in establishing the corporate structure and governance framework.
5. Adoption: Each is formally adopted during the incorporation process and early stages of the corporate lifecycle.
6. Consistency Requirement: Provisions in both should be consistent with each other to avoid conflicts in corporate governance.
7. Authority: Both have authoritative standing, one legally and the other operationally within the corporation.
8. Documented Reference: Both should be documented and easily accessible within the corporate records for reference.

Features of Articles of Incorporation vs. Features of Bylaws

1. Legal Requirements: Articles of Incorporation are required by state law and must be filed with the state government to legally form a corporation. Bylaws are not required by state law but are crucial for the internal governance of the corporation.
2. Public Visibility: Articles of Incorporation are public documents, meaning anyone can access them through the state’s business office. Bylaws remain private documents within the organization.
3. Foundational Information: Articles of Incorporation generally include basic details such as the company name, registered agent, address, and type of business. Bylaws are more detailed, outlining procedures and policies for internal management.
4. Amendment Process: Articles of Incorporation often require shareholder approval and re-filing with the state to make amendments. Bylaws can typically be amended by the board of directors without re-filing.
5. Compliance Monitoring: Articles of Incorporation help ensure compliance with state laws and include statutory requirements. Bylaws assist with internal compliance but do not affect state compliance directly.
6. Roles and Responsibilities: Bylaws detail the roles and responsibilities of board members and officers, whereas Articles of Incorporation generally do not specify these operational aspects.
7. Share Issuance: Articles of Incorporation often include information about the types and number of shares the corporation can issue. Bylaws might describe in detail how those shares will be managed and transferred.
8. Meeting Procedures: Bylaws commonly outline how and when meetings will be conducted, the quorum needed, and voting rules. Articles of Incorporation do not cover these operational details.
9. Corporate Goals: Articles of Incorporation briefly mention the corporation’s purpose or mission. Bylaws provide a detailed roadmap for achieving day-to-day operational goals.
10. Employee Matters: Bylaws may include policies related to the hiring, responsibilities, and compensation of employees, while Articles of Incorporation focus on legal formation aspects and do not address this.