What is The Difference Between Bylaws and Resolutions?

Bylaws serve as the foundational framework governing an organization's internal operations and structure. They establish the rules, procedures, and governance principles that guide decision-making and conduct within the organization. Bylaws typically cover various aspects such as membership, board composition, meeting procedures, officer roles, and amendment processes.

It's important to remember Limited Liability Companies (LLCs) typically do not use bylaws. Instead, they utilize an operating agreement. An operating agreement serves a similar function to bylaws in corporations but is tailored to the unique structure and needs of an LLC. It outlines the ownership and management structure, member roles and responsibilities, decision-making processes, profit-sharing arrangements, and other operational details.

While bylaws are commonly associated with corporations, operating agreements are the preferred governance document for LLCs. Operating agreements provide flexibility and customization options that align with LLCs' more informal and flexible nature.

Bylaws are like the rulebook for how an organization runs internally. They set out the dos and don'ts, the who's and hows, covering everything from who can join to how meetings are conducted and who's in charge. They're the roadmap for smooth operations and transparent decision-making within the organization.

• Use Case for Bylaws: Consider a nonprofit organization forming its bylaws. These documents outline the qualifications and responsibilities of board members, the procedures for electing officers, and the rules for conducting board meetings. For instance, the bylaws may specify that board members must serve staggered terms and outline the process for electing new members to ensure continuity and stability in leadership.

Resolutions

Resolutions are formal decisions or directives adopted by the governing body of an organization to address specific issues, make policy decisions, or authorize actions. They are typically proposed, debated, and voted upon during meetings of the organization's governing body, such as the board of directors or shareholders.

• Use Case for Resolutions: Imagine a corporation's board of directors passing a resolution to approve the company's annual budget. This resolution would authorize allocating financial resources for various operational expenses, capital investments, and strategic initiatives outlined in the budget proposal. It would serve as the official authorization for the company to proceed with its financial plans for the upcoming fiscal year.

Bylaws establish the foundational rules and structure of an organization. At the same time, resolutions are formal decisions made by the governing body to address specific matters or authorize actions within the framework set by the bylaws and do not apply to LLCs.