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A Company Constitution is one of the most important documents a business will have. Sometimes, certain sections of the document no longer reflect your company’s evolving needs in 2025. This is when it becomes necessary to update it.
If you’re a company considering amending your constitution, there’s a specific process that must be followed. The steps you take depend on your company’s structure and any additional requirements imposed by regulators and your internal policies. For further guidance, you might also check our article on Changing Your Business Structure.
What Is A Company Constitution?
A company constitution is a document that details the rules and regulations governing a company. It is a legally binding document, although it is not mandatory for every company to have one. In today’s dynamic business environment, a customised constitution can help to set internal policies that address modern challenges such as remote work and digital communications.
A company may choose to adopt a constitution either before or after registration – there is no prescribed time limit. This flexibility allows businesses to tailor their governance documents as they grow and evolve.
Constitution vs Replaceable Rules
While having a company constitution is optional, the Corporations Act 2001 provides a set of replaceable rules that come into effect if no constitution is adopted. These rules are broad and general, and in many cases may not fully suit the unique requirements of your business. A tailored company constitution allows you to amend internal policies and set bespoke governance standards that align with your company’s objectives.
Can I Change My Constitution?
Yes, a company can change its constitution. As your business evolves, updating the constitution to better reflect current management practices and operational changes becomes crucial. In 2025, many companies are modernising their internal policies to embrace digital transformation, remote work, and agile business practices.
Firstly, a special resolution must be passed. For public companies, there is a requirement to provide at least 28 days’ notice of the special resolution; for other types of companies, the minimum notice period is 21 days. This notice period is a critical step to ensure all stakeholders are fully informed.
Once the resolution is announced, it must secure at least 75% of the vote. In 2025, with many companies utilising digital solutions, secure electronic voting and proxy systems are increasingly common, streamlining the process and ensuring inclusivity.
How To Amend Your Constitution Under The Corporations Act
Before enacting any changes, it is essential to review the existing rules within your constitution. Often, your constitution may already outline the procedure for its own amendment, so those rules must be followed precisely. If the constitution does not specify a procedure, the next step is to identify and propose the resolution that needs to be passed. For further insights, our article on the Corporations Act 2001 provides a comprehensive overview of statutory requirements.
Notify Stakeholders
Next, it is crucial to notify all relevant stakeholders. A general meeting should be convened for directors and shareholders to discuss the proposed changes. In today’s digital era, many companies are hosting virtual meetings to maximise participation. Be sure to use secure and official channels – our guide on online business privacy offers useful tips for maintaining confidentiality during these discussions.
Voting
After thorough discussions, a vote is held. As mentioned, a special resolution requires a 75% majority to pass. All members should be given the opportunity to vote; if someone cannot attend, a proxy vote is permitted. Modern digital solutions now allow for secure electronic voting and e-signatures, simplifying the process considerably.
Following the successful vote, the company must notify the relevant authorities and distribute updated copies of the constitution to all members. It is advisable to consult with legal professionals – for instance, our article on choosing a small business lawyer can help ensure you meet all legal requirements.
In the current landscape, digital adoption is key. Many companies are streamlining their amendment processes by issuing digital notices, conducting secure virtual meetings, and using e-signature technology to finalise updates. These measures help to expedite the process and improve record-keeping.
Do I Need To Notify ASIC?
ASIC governs the regulatory environment for companies, and notifying them of any changes to your constitution remains one of your primary obligations. According to section 136 of the Corporations Act, a public company must notify ASIC of any constitutional changes within 14 days after the resolution is passed, along with providing them a copy of the amendments.
Depending on the type of change made, there are various forms to submit. If you are uncertain about the process, our expert legal team is ready to walk you through each step and ensure you remain compliant in 2025.
How Would This Play Out?
There’s a lot to take in, so let’s consider a practical scenario.
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Example Happy Bears is a corporation that produces and sells some of Australia’s most beloved toy bears. Aiming to reduce its carbon footprint and enhance sustainability, Happy Bears decides to update its constitution to better reflect its renewed core values. The members review the existing rules and agree that a general meeting is necessary to discuss the proposed changes. A notice is issued with the required 28-day period (for a public company), and a virtual meeting is convened to facilitate broader participation. After robust discussions, the vote is held, and the resolution passes with 90% of votes in favour. The updated constitution is then distributed to all members, and since Happy Bears is a public company, they notify ASIC by submitting Form 205. The amendments take effect from the date of the resolution, and the new governance practices are implemented accordingly. |
Key Takeaways
A company’s constitution can be amended, but the process is subject to strict rules and procedures. The specific requirements depend on your company type and the objectives you aim to achieve. Keeping your governance documents up-to-date is critical in the fast-paced business environment of 2025.
Consulting with legal professionals can simplify this transition and ensure your changes adhere to all regulatory standards. For more information, you may also want to read our guides on business set-up and industry regulations.
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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