A company constitution is a document that generally specifies the rules governing the relationship between, and activities of, the company and its shareholders.

In this article, we explain when you may need a company constitution and how it can assist you when setting up a new company.

When Do I Need a Company Constitution?

When you set up a company, you may adopt a constitution either on or after registration. The Corporations Act 2001 (Cth) does not prescribe the rules that must be included in a constitution. A company’s constitution may modify the provisions of the Corporations Act that apply as replaceable rules and specify the replaceable rules that do and do not apply to your company.

A constitution is a special form of contract as it binds the company, shareholders who initially agreed to adopt a constitution and any future shareholders, unlike other forms of contract that only bind those who are parties to it. Read our article to find out what you should include in your company constitution.

What Does a Company Constitution Do?

A company’s constitution has effect as a contract between the company and each member, a member and each other member and the company and each director and company secretary, under which each person agrees to observe the provisions of the constitution so far as they apply to that person. This only creates enforceable rights and obligations in relation to shareholders in their capacity as shareholders of the company, not in their personal capacity. It also does not create enforceable rights and obligations between the shareholders of a company and the company’s directors and/or company secretary.

Consequently, a shareholder may be precluded from enforcing any provisions in a constitution that confer personal rights, which may include the right to be employed by the company, non-compete provisions and provisions designed to protect the interests of minority shareholders.

Key Takeaways

A company constitution is an important document. Every company has one, and you will need to refer back to it before taking various decisions. Your company constitution works in conjunction with your company shareholders agreement, so make sure they are both drafted well.

If you would like assistance with drafting your company constitution, call LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Matthew Payne
Get a Free Quote Now

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • We will be in touch shortly with a quote. By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy