By-laws are the permanent rules of corporate action as distinguished from resolutions, which are but temporary in their effect and apply only to the particular occasions for which they are passed.
The general management of a corporation must, as a matter of course, conform to: (1) The constitution and laws of the state of incorporation; (2) the provisions of its charter; (3) the provisions of the common or general corporation law; (4) the regulations of its by-laws; (5) the rules of parliamentary law so far as applicable. In the by-laws it is desirable to collate and repeat the provisions from these several sources that bear most directly on the management and procedure of the corporation.
Any stockholder or creditor of a corporation has the right to demand the regular and lawful conduct of its business, and hence any irregularities of procedure may lead to legal interference. Many irregularities in corporation organization and procedure are passed over or legalized by the acquiescence or assent of all the parties concerned, as in the waiving of the legal formalities of the first meeting or, as is often the case in small corporations, the formal regulations are quite commonly waived at convenience.
By-laws are usually grouped under the following heads: (1) Stock; (2) Stockholders; (3) Directors; (4) Officers; (5) Dividends and Finances; (6) Sundry Provisions; (7) Amendments.