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What Is A Company Constitution?

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The constitution of a company is the document setting out the rules for the internal management of the company.

It is essentially a contract between the shareholders, directors, and the company, prescribing the rights, roles and responsibilities between these parties. Think of it as the rule book setting the foundations of the company.

Typically, a company would adopt a constitution when first incorporating, but some companies simply choose to rely on the replaceable rules of the Corporations Act 2001.

Some topics usually covered in a company constitution are:

  1. How to issue shares
  2. Rights of different share classes
  3. How unpaid shares work
  4. Liability of shareholders
  5. How transfer of shares work
  6. What happens to shares if a shareholder dies, is incapacitated or becomes bankrupt
  7. How to hold meetings and pass resolutions
  8. How voting works
  9. How shareholder proxies work
  10. How to appoint and remove directors
  11. Remuneration of directors
  12. Powers of directors
  13. Role of the secretary
  14. Role of the managing director
  15. How to execute documents
  16. Dividend rights
  17. Winding up the company
  18. Loans to shareholders
  19. Indemnity and insurance
Tomoyuki Hachigo  
Tomo is the co-founder of Sprintlaw and a commercial lawyer with a broad range of legal experience. Before starting Sprintlaw, he was an M&A lawyer at a top-tier law firm advising businesses of all sizes from large corporates to startups.

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