Steps to Amend the Bylaws:

1. Schedule Board Meeting. Schedule a meeting of the board of directors and send written notice to all board members. The notice needs to state the purpose of the meeting, which is to amend the Bylaws of the corporation. Other business can also be conducted at the meeting if it is stated in the notice. A form for the type of notice to be used is available here.

2. Pass Resolution Authorizing Amendment. A quorum must be present for the meeting in order to conduct business. The Bylaws should indicate how many directors are required to make up a quorum. At the meeting of directors, a vote must be taken on whether to amend the Bylaws and what the amendment will be. A vote to amend Bylaws must normally pass by a majority of those present at the meeting. The following is an example of the type of resolution that would normally be voted on:

”RESOLVED, that paragraph ___ of the Bylaws of the corporation shall be amended to increase the number of directors on the board of directors from 5 to 7.”

3. Prepare Minutes. If the resolution passes, then the resolution should be prepared in the form of minutes and placed in the corporation’s records. The secretary or other corporate officer should then make the change in the corporate Bylaws. It is helpful to keep the old Bylaws for reference purposes and title the new ones as Amended Bylaws so that a written history of changes is preserved.

4. Alternative Method. Instead of holding an actual meeting of directors, the action to amend the Bylaws can be accomplished by preparing a written Consent in Lieu of Corporate Meeting setting forth the resolution to be considered. If all directors are in agreement and are willing to sign the consent document, then this action can be accomplished without the need to hold an actual meeting.

Steps to Amend the Articles of Incorporation:

1. Easiest Method. The Corporate Filing Office
may have a form, either online or available upon request, which you
can fill out and file. So check with them first to see if the form
is available. If the form is available, you will need to describe
the change to be made and indicate that the change is approved by
the shareholders of the corporation. There is usually a small
filing fee involved. Before you file the form, you will need to get
corporate authority to take the action (The procedure for this is
described in the next paragraph).

2. Obtain Corporate Authority. Whether you use
an online form from the Corporate Filing Office or follow the
procedure outlined , you need to have corporate authority. Most
amendments to the articles of incorporation require approval of the
shareholders as well as directors. This is actually a protection
for shareholders so that fundamental changes to the corporation
cannot be made without their knowledge and approval. Authority to
amend the articles of incorporation can be obtained by preparing a
Consent in Lieu of Corporate Meeting or in holding a special
meeting of shareholders.

Please Note: This resolution can be inserted in a set of
minutes or inserted in consent in lieu of corporate
meeting.

3. Prepare Articles of Amendment. If the state
Corporate Filing Office does not have a form to use for amending
articles of incorporation, you will need to prepare one. The form
is often titled, “Articles of Amendment.” The Articles of Amendment
contain basic information about the corporation and then describe
the amendment or change to the articles. They also frequently
indicate the number of shares which voted in favor of the amendment
and the number of shares, if any, which voted against the
amendment. This form will then need to be filed with the Corporate
Filing Office together with a filing fee. Before filing the form,
you will need to obtain corporate authority

Special Note: In my experience, this is one of the most
effective and timesaving procedures a small corporation can use to
conduct its formal business.

Examples might be if the corporation needed to issue shares of
stock, amend the articles of incorporation to change the corporate
name, or to sell a corporate asset. A notice for a meeting could be
prepared and a meeting of shareholders held. However, this all
takes time and if all shareholders are in agreement with the action
to be taken, preparing a written consent form is much easier and
faster. Steps to conduct corporate business without a meeting:

1. Prepare Written Consent or Authorization. A
corporate officer should prepare or direct the preparation of a
proposed document, usually called a, “Consent in Lieu of Corporate
Meeting” or “Approval of Corporate Action Without A Meeting.” The
name given the document is not too significant. The document must
state in written form the action to be approved or resolution
adopted by the corporation. Reasons for the action being taken can
also be included.

2. Obtain Signature of All Participants. The
document should be read, approved and signed by all members of the
group, either shareholders or directors. If any member disagrees or
is not willing to sign the document, then this procedure will not
work (unless the corporate law of your state only requires majority
approval). In that case, the members need to follow the procedures
for holding a corporate meeting.

There are many legal cases where the courts have honored and
preserved the “corporate veil” thus maintaining the limited liability
protection for the shareholders. This is the rule in most cases.
However, there are other situations where the courts have “pierced
the corporate veil” and found the shareholders personally liable for
the debts of the corporation. If a lawsuit is filed against a
corporation and its owners/shareholders, then a judge must decide
if the owners of the corporation have organized and operated the
corporation in a way so as to create and maintain the separation
between the shareholders and the corporation.

The law provides that if the shareholders of a corporation operate
like a corporation by following corporate formalities, then they will
be afforded limited liability protection. If they do not operate like a
corporation, they could lose the protection.

Another way to discontinue is to file Articles of Dissolution with the secretary of state. Many states will have a form you can use on their website or you can contact them to obtain a form. When filing this form, you will need to indicate that all of the corporation’s creditors have been paid and there are no outstanding debts. Again, you will still need to notify the IRS and state taxing agencies that you are out of business or they will keep sending you forms and expecting to receive your tax returns.

Finally, you can file with the court requesting that the corporation be dissolved. This procedure is usually done only when the shareholders or other involved parties cannot agree on conducting business or on how to liquidate and distribute assets of the corporation. By doing this, you are asking a judge to review the facts and decide for you.

Important Note: If your corporation is administratively suspended or dissolved, the liability protection of your corporation may also be suspended or lacking, and your personal assets may be at risk for any legal actions, or causes of action, which might arise during that period of time. It is important not to let this happen when it is relatively easy to get your annual report form filed.

Most states require the payment of an annual fee ranging from $20 to $100 when filing the report. In some states there is no fee required.

If you do not file the annual report form timely, then your corporation can be suspended as an active corporation until you do file the form. Most states grant you a grace period, but if the form is not filed within the grace period, then your corporation is administratively dissolved which means it cannot legally conduct business within the state.

Special Note: You need to be aware that during the time your corporation is administratively suspended or dissolved, the liability protection of your corporation may also be suspended or lacking and your personal assets may be at risk for any legal actions, or causes of action, which might arise during that period of time.

The value of the consideration, other than cash money, is a question reserved for the
directors of the corporation. In other words, the directors have the
right and authority to determine the value of equipment, services, or
other property given to the corporation in exchange for its stock.
The exchange of stock for some form of consideration, involves a
basic negotiation between the person desiring to purchase the stock
and the directors of the corporation. They must come to some
agreement on what the value of the property or services is and how
many shares of stock will be given in exchange.

Stated in another way, either the shareholders or directors can
consent in writing to corporate action without holding a meeting so
long as all of the participants are in agreement. This is a common and
convenient way to conduct corporate business. It takes much less
time than holding a meeting and some corporate experts believe it is
a more precise way to conduct corporate business because the
corporate action or resolution must be precisely stated in writing.

When minutes are prepared, the written document is a summary of
the secretary’s thoughts and impressions about what happened at
the meeting, which may or may not be accurate. This practice also
avoids the need for notice of a meeting because it can only be done
if all participants are in agreement and sign the document. The
document most commonly used is called a “Consent in Lieu of
Corporate Meeting” or “Memorandum of Corporate Action Without
A Meeting.”