Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Clear governance can make or break a growing business. Whether you’re a startup with big plans or an established SME adding new leadership roles, a simple, well-written business charter helps everyone pull in the same direction.
In Australia, a business charter sits alongside your key legal documents and sets out your purpose, values, decision-making rules, and the way leaders and teams work together. It’s practical, readable and designed to be used day-to-day - not filed away and forgotten.
In this guide, we’ll explain what a business charter is, how it fits with your legal obligations, what to include in a template, and the steps to draft and adopt one that actually works in practice.
What Is A Business Charter?
A business charter is a short, plain-English governance document that captures how your business is run. Think of it as your operating playbook for leadership and teams. It typically covers your purpose, values, roles, responsibilities, how decisions get made, and how conflicts are resolved.
Unlike formal legal documents, a charter is designed to be accessible to everyone in the business. It complements (but doesn’t replace) legal instruments like your Company Constitution or a Shareholders Agreement. Those documents create legal rights and obligations. Your charter turns those big-picture settings into day-to-day guidance people can actually follow.
You can have a whole-of-business charter, and you can also create charters for specific groups (for example, a board charter, an executive team charter, or a product steering committee charter).
Why Create A Business Charter In Australia?
Good governance isn’t just for large listed companies. For Australian startups and SMEs, a business charter can:
- Align your team quickly: New hires, remote teams and contractors can get up to speed on how you work without lengthy handovers.
- Reduce decision friction: When it’s clear who decides what (and how), you avoid stalemates and speed up execution.
- Support compliance: Your charter can point to important obligations (like consumer law or privacy) and how you meet them, helping demonstrate a culture of compliance.
- Protect relationships: Clear roles and escalation pathways reduce the chance of disputes between co-founders, directors and managers.
- Help with funding and due diligence: Investors and partners often look for evidence of governance. A simple charter shows you’re organised and serious.
If you’re earlier stage and still working things out with co-founders, a charter also pairs well with a Founders Agreement, which formally records ownership, vesting and key expectations while your charter covers day-to-day ways of working.
How To Draft A Business Charter: Step-By-Step
You don’t need to be a lawyer to draft a helpful charter. Aim for clarity over complexity, and build on the documents you already have. Here’s a practical, step-by-step approach.
1) Confirm Your Scope And Audience
Decide whether you’re writing a whole-of-business charter or a team/committee charter. Keep the primary audience in mind: will this be used by your leadership team, managers, or everyone in the company?
2) Gather Your Building Blocks
Collect the governance and policy documents you already rely on. Common inputs include your Company Constitution, Shareholders Agreement (if any), strategy papers, role descriptions, org charts, and key policies (for example, your Whistleblower Policy or Privacy Policy). Your charter should be consistent with these documents and cross-reference them - not repeat them verbatim.
3) Draft In Plain English
Use short sentences, active voice and everyday language. Avoid legal jargon. If you need to describe a legal concept, add a quick explanation in brackets so the reader doesn’t have to guess.
4) Define Roles And Decision Rights
Clarity here is the heart of a good charter. Spell out who is accountable for what, where decisions sit (board, CEO, execs, managers), and how those decisions are made (unanimous vs majority, quorum rules, consultation expectations). Keep it simple and operational.
5) Set Behaviour And Conduct Expectations
Connect your values to specific behaviours, and outline expectations around meetings, communication, confidentiality and conflicts of interest. Where appropriate, point to your underlying Conflict Of Interest Policy or other policies for the detailed process.
6) Add Escalation And Dispute Pathways
Things won’t always go to plan. Include clear steps for resolving disagreements - for example, “try to resolve with the person directly, then escalate to the CEO, then the chair, then an independent adviser if needed.” Simple pathways save time and protect relationships.
7) Align With Legal Documents
Do a consistency check. Your charter shouldn’t contradict your constitution, shareholder or employment documents. If it does, the legal documents will generally prevail. It’s best to close any gaps now so your team has one clear way of working.
8) Approve And Adopt
Decide how you’ll formally adopt the charter. Companies typically use a board or director resolution and record the adoption date, version and review cycle. A practical way to document this is with a short board minute supported by a Directors Resolution Template.
9) Communicate, Train And Review
Share the charter, walk teams through key sections, and build it into onboarding. Set a review cycle (for example, every 12 months or after major changes) so the charter stays relevant as your business grows.
What To Include In Your Business Charter Template
Every business is different, but most effective charters cover the following sections. Use these headings to structure your template, then tailor the detail to fit your operations.
- Purpose And Vision: One or two sentences that explain why you exist and what success looks like.
- Values And Behaviours: The values you live by and the practical behaviours expected from leaders and teams.
- Scope And Authority: What the charter applies to (business-wide, a specific team, or a committee) and how it relates to other governance documents.
- Roles And Responsibilities: Who does what - for example, board, CEO, executive team, managers and key committees. Keep it operational and avoid repeating job descriptions word-for-word.
- Decision-Making: What decisions sit where, how decisions are made (majority vs unanimous), quorum, and how challenges or conflicts are escalated.
- Meetings And Reporting: Meeting cadence, agendas and papers, how decisions are recorded, and what gets reported to whom and when.
- Risk And Compliance: How you identify and manage key risks; links to relevant policies and controls (e.g. finance approvals, privacy, information security, workplace safety).
- Conflicts, Confidentiality And Ethics: How conflicts of interest are disclosed and managed, expectations around confidentiality and ethical conduct, with pointers to your Conflict Of Interest Policy.
- Stakeholder Communication: Principles for internal and external communications, media and social media, and who may speak on behalf of the business.
- Review And Amendments: Review frequency, how changes are proposed and approved, and version control.
- Reference Documents: A short list of related policies and legal documents (for example, constitution, Shareholders Agreement, Privacy Policy, staff handbook).
Tip: Keep each section brief. If the detail already lives in a policy, link to the policy rather than duplicating it.
Legal And Governance Documents That Support Your Charter
Your charter is strongest when it points to the “hard law” documents that govern your company and relationships. Here are the essentials many Australian businesses use alongside their charter.
- Company Constitution: For companies, the constitution sets the legal rules for how the company operates (appointments, meetings, share rights). Your charter should be consistent with the Company Constitution and can translate its rules into practical guidance.
- Shareholders Agreement: If you have multiple owners, a Shareholders Agreement covers ownership, decision-making thresholds, share transfers and founder exits. Your charter can reflect these rules so teams know how big decisions are made.
- Founders Agreement: Earlier-stage ventures often start with a Founders Agreement while a company is being set up. A charter can help you operate smoothly while the legal structure matures.
- Key Policies: Policies make your compliance concrete. Depending on your operations, link to policies such as Privacy Policy, whistleblower, information security, workplace health and safety, and your Conflict Of Interest Policy.
- Board And Committee Terms Of Reference: If you have a board or committees, adopt short terms of reference to clarify purpose, membership, authority and meeting practices. These can be included as appendices to your charter or linked from it.
- Execution And Resolutions: When adopting or amending charters, record decisions properly (for example, via a board minute and a Directors Resolution Template). If you need to execute formal documents, it’s helpful to understand signing rules under Section 127.
Remember, your charter doesn’t replace these documents - it complements them. If there’s a conflict, the legal documents normally take priority.
Key Takeaways
- A business charter is a practical governance playbook that aligns your team on purpose, roles, decision-making and conduct.
- Keep your charter short, plain-English and consistent with your legal documents such as your Company Constitution and Shareholders Agreement.
- Cover the essentials: roles and responsibilities, decision rights, meetings, escalation pathways, risk and compliance, and a clear review process.
- Adopt the charter formally (for example, via a board resolution) and build it into onboarding, training and regular reviews so it stays useful.
- Link the charter to core policies and controls - including your Privacy Policy and Conflict Of Interest Policy - to support compliance across the business.
- It’s easier to get this right early; tailored advice can help you set up a charter and governance toolkit that grows with your business.
If you’d like help drafting or adopting a business charter for your Australian company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
