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Violations of company bylaws can lead to business litigation

On Behalf of | Jan 31, 2020 | Business Litigation

Running a large corporation is not easy to do. Because so many responsibilities exist, most corporations have a board of directors to ensure that everything runs as it is supposed to while shareholders receive updates. As the CEO of a successful company, you understand the importance of each employee doing his or her part and following company bylaws.

Of course, some people may choose to violate the bylaws and subsequently cause problems for the company. If this has recently happened within your organization, you understandably have concerns and want to ensure that you handle the situation appropriately, even if that means taking legal action.

Consequences of violations

The bylaws of a company help ensure that the company stays regulated and that affairs are managed properly. Directors have an obligation to follow these bylaws to ensure that the best interests of the company remain at the forefront. Because shareholders do not participate in the day-to-day activities, having these bylaws can bring them a sense of security as they know how the directors will handle operations.

If a member of your board violated the bylaws, you, other members of the board and the shareholders could take civil legal action against the offender. This step may help ensure the protection of the company and work toward compensation for any damages that resulted from the violations. In some cases, the repercussions of not complying with the a company’s bylaws can be detrimental to the business, especially if one board member took a significant risk without consulting with the other members and damages resulted.


Unfortunately, business litigation is not a matter to take lightly. You may go back and forth before deciding whether filing a legal claim against the person who violated the bylaws is the appropriate course of action. If the violation resulted in significant damages, this step may be the only viable option to work toward mitigating the negative effects.

Understandably, you may have concerns about how litigation itself will affect your California business and what consequences could stem from not taking legal action. In efforts to gain as much information about your situation and available options as possible, you may want to discuss your predicament with experienced and knowledgeable attorneys. Your legal counsel can assess the situation and guide you toward the path that best suits your company’s needs.