MBE Rules · Business Associations
Articles and Bylaws
Cal. Corp. Code §§ 212-213
The rule
Articles control over conflicting bylaws; bylaws are adopted and amendable by shareholders (and by directors unless restricted), and govern corporate machinery — meetings, offices, share procedures.
In plain English
The Articles of Incorporation take precedence over any conflicting provisions in the Bylaws of a corporation. Bylaws can be created and modified by the shareholders and, in some cases, by the directors, and they outline the internal operations of the corporation such as how meetings are conducted and how shares are managed.
Worked example
A corporation's Articles state that the board must consist of at least five members, but the Bylaws mistakenly state that the board can have as few as three members. If a shareholder challenges the board's composition, the Articles will control, and the board must have five members. Therefore, the challenge is upheld.
Memory hook
Articles rule the roost; bylaws are just the house rules.
The trap
Exams may present scenarios where students misinterpret the authority of bylaws versus articles, leading them to incorrectly apply a bylaw that conflicts with the articles.
How examiners test it
Questions often test the hierarchy between articles and bylaws, requiring candidates to identify which document governs in a given situation.
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