What Are Bylaws? A Guide for Not-for-Profit Boards

What are bylaws

Bylaws are internal rules that govern how an organisation operates. They cover things like membership requirements, governance structure, officer roles, meeting protocols, voting procedures, and how to make amendments.

In Australian practice, most not-for-profit organisations have a single governing document — the constitution or rules — which covers both high-level purpose and operational detail. Some larger organisations, particularly companies limited by guarantee, use a two-tier structure with a constitution and separate subordinate bylaws for operational procedures. This page covers both arrangements.

Formation and Purpose

Where bylaws exist as a separate document, they are developed alongside the constitution — the document registered with the relevant state or territory regulator (for incorporated associations) or with ASIC (for companies limited by guarantee).

The constitution sets out the organisation’s purpose and basic structure. Bylaws go into the specifics — operational procedures and rules. The constitution gives the organisation its legal identity; the bylaws set out how it operates day-to-day.

Bylaws as binding rules

For companies registered under the Corporations Act 2001, section 140 gives the constitution the effect of a statutory contract between the company and each member, and between members. For incorporated associations, the rules are binding under the relevant state or territory Associations Incorporation Act, though they are not characterised as a contract in the same way.

Whether the organisation’s operational rules sit within the constitution or in a separate bylaws document, they should be reviewed and updated regularly to reflect changes in legislation and the organisation’s circumstances.

Changes to the constitution or rules require a formal process — typically a special resolution of members (see Amendment Process below). Changes to subordinate bylaws may require only a board resolution, depending on what the constitution allows.

Governance Structure

Bylaws define the governance structure. They outline the structure of the board of directors or governing body, including the size of the board, the length of terms for directors, and the process for electing and removing directors.

This structure directly affects how decisions are made and how power is distributed within the organisation. Bylaws also specify the roles and powers of officers – such as the president, secretary, and treasurer – providing clear guidelines on leadership responsibilities and authority.

Meeting and Voting Procedures

Bylaws also set out meeting procedures, including how meetings are called, how often they occur, the quorum required for decision-making, and how voting takes place. This ensures that organisational decisions are made efficiently, transparently, and democratically.

Bylaws also define different classes of membership, if applicable, and the rights, privileges, and obligations of each class. This is particularly important in organisations where membership plays a central role in governance and operations.

Financial Management

Financial management and reporting are also addressed in bylaws, dictating the fiscal year of the organisation, the process for budget approval, and the management of funds. This includes provisions for handling donations, dues, and other sources of income, as well as guidelines for financial audits and reporting.

These provisions support accountability and transparency in how the organisation manages its money.

Committees and Delegation

Bylaws typically include provisions for committees, allowing the board to delegate specific responsibilities to smaller groups focused on areas like finance, nominations, or events.

Amendment Process

How bylaws are amended depends on whether the rules sit within the constitution or in a separate document.

Amending the constitution or rules of an incorporated association requires a special resolution of members — at least 75% of votes cast at a general meeting, with at least 21 days’ written notice. The amendment must then be registered with the relevant state or territory regulator (such as NSW Fair Trading or Consumer Affairs Victoria), typically within 28 days. For companies limited by guarantee, amending the constitution also requires a special resolution under the Corporations Act.

Amending subordinate bylaws — where they exist as a separate document — may require only a board resolution, depending on what the constitution allows. The threshold is whatever the constitution specifies.

Common Provisions Boards Should Review

When reviewing bylaws, boards should pay particular attention to a few provisions that commonly fall out of date. First, check that the quorum requirements still reflect the current size and composition of the board and membership. An organisation that has grown significantly since its founding may find that its original quorum threshold is either too easy or too difficult to meet, which can cause problems at general meetings.

Second, review the provisions around director terms, rotation, and removal. Bylaws that allow directors to serve indefinitely without re-election can lead to stagnation and make it harder to refresh the board with new skills. A clear rotation schedule, combined with a transparent nominations process, supports better board evaluation and succession planning.

Third, check whether the bylaws address electronic meetings and circular resolutions. Many older bylaws were written before virtual meetings became common and may not explicitly permit them. Updating these provisions ensures the organisation can operate effectively when in-person attendance is not practical.

Finally, confirm that dispute resolution procedures are still appropriate and that the bylaws align with the current version of the relevant state or territory legislation. Each state and territory has its own Associations Incorporation Act (for example, the Associations Incorporation Act 2009 in NSW or the Associations Incorporation Reform Act 2012 in Victoria). Organisations registered as charities must also comply with the Australian Charities and Not-for-profits Commission Act 2012.

Related Terms

Majority

Quorum

Board of Directors