Creation of Governance Documents in Georgia
Corporate Governance 101
We should start with the concept of corporate governance. Corporate governance is the system of structures and rules that determine how a corporation runs. It can be incorporated into corporate articles, bylaws, constitutions, continuing resolutions, or other types of ownership documents. The level of governance and formality needed varies depending on the organization and the number of people involved.
A single person entity doesn’t need complicated governance. However, any organization owned by more than one person should have a certain minimum level of governance to protect everyone and, more importantly, to avoid problems that might be caused by misunderstandings.
Corporate governance in the modern era has the additional purpose to ensure a business meets its legal and financial duties to all of its stakeholders. These stakeholders include government regulators and those who own shares in the business, often known as shareholders. Building corporate governance for this purpose usually means handling conflicts of interest in addition to separating lines of authority so that there is proper oversight in the company. Of course, corporate governance can take many forms, but these are some of the norms of corporate governance that you should know. Now that we’ve discussed corporate governance in detail, keep reading to learn about the importance of corporate governance documents and creating governance documents in the state of Georgia.
Why Are Documents of Corporate Governance Important?
Governing Documents
All businesses require legal governing documents. A corporation, more specifically, will need bylaws, a certificate of incorporation, and a shareholders’ (or members’ in the case of a limited liability company) agreement more often than not. These documents establish rules for the management of the business and lay out the owners’ obligations and rights. You should take great care when creating bylaws and other documents about corporate governance.
These documents may not appear to be crucial to the business’s long-term success at first glance. However, governing documents often play a vital part in the enterprise-level operations of the company. That is why it is a good idea to consult lawyers who have experience in corporate governance matters and, perhaps more importantly, have seen situations where problems have occurred in the past.
Governing documents, such as conflict policies, can prove to be vital in various scenarios. One of these scenarios is a conflict between the owners of a business. A conflict between the owners of a business is quite a common occurrence. When it does happen, governing documents, especially conflict policies, are extremely important when resolving the conflict. Now that you know about the importance of governing documents, let’s move on to how you create them in the state of Georgia.
How Do You Create Governance Documents in Georgia?
Bylaws
Bylaws are one type of governing document. Typically, the corporation’s board of directors adopts initial bylaws as part of the company’s first organizational meeting. Bylaws can cover a variety of subjects, but they should definitely cover finances, records, stock, meetings, officers and directors, and emergencies and amendments.
The board of directors typically prepares the bylaws for the corporation, although the board of directors usually works with an outside consultant or attorney. You should be aware that corporate bylaws are legally binding and shareholders, officers, and directors all have a legal responsibility to ensure that they abide by the company’s corporate bylaws. It is important to know what those policies say.
Conflict Policies
Conflict policies are another common kind of governing document. One conflict policy is a conflict of interest policy and this is a requirement for a corporation’s board of directors. Corporations worry about conflicts of interest between the members of their corporate board and between executives. Board members cannot allow their personal interests to get in the way of their decisions as directors. Thus, the majority of corporations have a conflict of interest statement and policy that directors are required to sign.
Your corporation’s attorney should prepare the conflict of interest policy. After that, all board members should sign it at the first board meeting. Members not a part of the company at the time of the first board meeting should sign the conflict of interest policy. The company should not allow anyone to serve on the board without signing the conflict of interest policy.
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Creating governance documents can prove challenging, especially for entrepreneurs who do not have much experience in the business. Thankfully, you can trust the law firm of DeLong, Caldwell, Bridgers, Fitzpatrick, and Benjamin LLC to help. We can create governing documents for your corporation. Our team will explain everything you need to know about governing documents and how we create them. We are one of the most experienced employment law firms in the state of Georgia. You can rely on our experience when you’re looking to start a corporation. Give us a call or check out our website! See how we can help you get your business up and running!