Large corporations are complex entities and a board of directors is typically used to ensure the company runs smoothly. If you are the CEO of a corporation, you understand the enormous number of responsibilities involved in running a company, keeping shareholders happy and ensuring company bylaws are followed.

What happens if somebody violates the corporate bylaws? It can cause significant problems for the company. As CEO, you will want to make sure the situation is handled properly.

What are the consequences of bylaw violations? Because the bylaws set forth the rules regulating the company, the directors are obligated to follow the bylaws and to act in the best interests of the corporation. Additionally, the bylaws provide security to the shareholders because they know how the directors will handle the day-to-day operations.

A violation of the bylaws by a member of the board of directors can result in the other board members or the shareholders filing a lawsuit against the offender. Taking this step can help protect the corporation as well as potentially recoup any monetary damages that resulted from the violation of the bylaws. One of the most common bylaw violations occurs when a board member takes a significant corporate risk without conferring with the other board members and costly damages result.

Before litigation occurs, you should try to resolve the matter outside of court. Lawsuits are time-consuming and expensive. However, if litigation is the only option, it should be taken seriously, and you should actively work to mitigate any negative effects.

If your company is facing violations of law or other misconduct by its officers or directors, it is important to confer with experienced legal counsel for understand all the options and consequences involved with the potential litigation. We understand that business litigation can seem overwhelming, but it is what the attorneys at Mailly Law do every day. If you believe a lawsuit is in the near future, contact us today to schedule your initial consultation.