Constitutions

Did you know that an off-the-shelf constitution can be detrimental to your business?

Whether you’re a company, club or association, you will most likely need a governing document known as a constitution. For private companies, the constitution will set out the rights, roles and responsibilities of directors and shareholders as well as the rules that govern the internal management of the company.

The best way to describe a company constitution is to think of it as a contract between the company and any director, secretary, member and each other. Drafting a constitution is a great way to clarify any objectives and processes of the company.

However, a poorly drafted and/or an off-the-shelf constitution can expose the company to a number of risks, leading to confusion and additional costs.

Does your constitution clearly outline how shares will be transferred and how dividends are paid to shareholders?

How many votes are required to make certain decisions at meetings?

Does it factor in changes in technology, for example how technology is used in meetings for attendance and appointing a proxy?

What does your constitution say about how the company will issues loans to third parties?

Practically speaking, an ineffective constitution will mean that your business won’t be able to run the way you want it to.

For more information, speak to one of our committed corporate and commercial lawyers who will be able to draft a bespoke constitution custom-made to suit the circumstances of your business.

What we do

We can help you with:

  • Drafting and adopting your constitution;
  • Reviewing and updating your constitution; and
  • Advice relating to the replaceable rules in the Corporations Act 2001 (Cth).

The MV difference

  • We are commercially focussed and will work to achieve the best outcome for your business.
  • We are committed to protecting your interests having regard to both legal and non-legal interests.
  • Our commercial and litigation teams work seamlessly together to enforce and protect the company.

FAQs

If you currently don’t have a company constitution in place, you can still adopt one after registration. However, this will require the company to pass a special resolution to adopt the constitution.

The internal management of a company can be governed by the company constitution alone, or in tandem with applicable provisions of the Corporations Act 2001 (Cth). The replaceable rules can apply to officeholder appointments, inspection of a company’s books, director’s and member’s meetings, and dealing with company shares and dividends. In most instances, the company constitution will specify which replaceable rule (if any) can be applied to the company’s internal management. The replaceable rules do not apply to public companies, some special purpose companies, and sole director and shareholder proprietary companies.