Which statement about bylaws is accurate?

• A. They are binding on third parties
• B. They may be adopted only by the board
• C. Shareholders may adopt, and the board may adopt if authorized by the certificate or shareholder bylaws
• D. They cannot be amended

Answer: (C)

Bylaws govern the internal management of a corporation, including who may adopt or amend them and under what authority. They’re not meant to bind outsiders or third parties in the same way that the charter or statutes do; they regulate the internal procedures the company and its officers follow.

The correct statement recognizes both ways to obtain bylaws: shareholders may adopt bylaws, and the board may adopt bylaws if the certificate of incorporation or the bylaws themselves authorize the board to do so. In other words, adoption or amendment can come from the shareholders, or from the board if there’s explicit authorization allowing the board to act in that capacity.

The other options overstate or misstate the rule. Bylaws are not binding on third parties merely by virtue of being bylaws; they’re internal rules, though their procedures can affect corporate actions. It’s too restrictive to say bylaws can be adopted only by the board, since shareholders often have that power too. And bylaws can be amended, so saying they cannot be amended is incorrect.