Adoption of Constitution
Every company has to be governed by a set of internal management rules.
ASIC allows a company to be managed by replaceable rules, a constitution or a combination of both.
The replaceable rules do not apply to proprietary companies where the one person is the sole director and sole member.
The Constitution for most companies is drawn up prior to the registration of the company and is basically a contract between:
- the company and each member;
- the company and each director;
- the company and the company secretary;
- and a member and each other member.
A company can adopt a constitution after the company has been registered by passing a special resolution signed by the members.
One benefit of having a constitution opposed to using the replaceable rules is that the rules and provisions of a constitution can be modified.
The following companies must be governed by a constitution:
- Public companies “Limited by Guarantee” who are applying to omit the word Limited from their name under section 150;
- ‘No Liability’ public companies under s112;
- ‘Special purpose companies’ that want to obtain the reduced annual review fee under item 103 of the Corporations (Review Fees) Regulations 2003.