The Bylaws and Certificate of Incorporation are the two fundamental corporate charter documents of a Delaware corporation. The Bylaws are not filed with Delaware’s Secretary of State, however the Certificate of Incorporation is different. The Certificate of Incorporation must be filed with the Delaware Secretary of State for it to be considered “in effect”.
The Bylaws outline those general rules and procedures that will govern the conduct of your startup – specifically things such as the following:
The Bylaws are considered standard or “boilerplate” documents that need not vary from one type of business to another. In other words, a technology company and a furnace retailer can use the same form Bylaws without a problem. However the form Bylaws your startup chooses should be as close to standard as possible. The chosen form should contain the components and language that 90% of such forms have (and nothing extra).
Startups which fail to use a standard form Bylaws can pay a price later when they seek outside financing. Variations from standard procedures and forms are never viewed favorably by seasoned investors and their counsel. A seemingly simple mistake – like selecting the wrong form for a key document – may actually slow down the financing process. Sometimes a mistake of this kind can even put the ability of a startup to secure financing at risk.