Bylaws are a separate set of rules governing how a corporation is run. Bylaws are adopted by the shareholders who formed the corporation. They can later be changed by a vote of the shareholders or the directors, depending upon the particular state corporation law and the provisions of the certificate of incorporation. Directors are responsible for the management and exercise the rights and power of the corporation. More specifically, directors, either acting as a board or through one or more committees of the board, set corporate policy, establish short and long term plans and strategies, and determine the overall direction of the corporation's business.
Corporations enjoy many advantages as a business form.
Perhaps the most important advantage is that a corporation's stockholders, directors, and officers are not liable for the debts or other obligations of the corporation. Usually they are liable only for any debts or other obligations which they have personally guaranteed or result from their own negligence or misconduct. Because it is a separate entity, a corporation is not terminated or dissolved upon the death or departure of a shareholder. As a result, the shares of corporations are usually freely transferable. The federal tax treatment of corporations is governed by the Internal Revenue Code.