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Company Constitution

Company Constitution

Company Constitution

Perth Commercial & Corporate Lawyers

West Perth Legal provides tailored and professionally drafted company constitutions for proprietary companies. We will help you ensure that the document provides your business with clarity around your company’s operation, internal management, and governance.

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Company Constitution

What is a Company Constitution?

A company constitution is a legal document that sets out the relationship between the company and its members (also known as shareholders), its directors and the company secretary, and the relationship between shareholders. It is a key document for the company’s internal management and governance. As stated by ASIC, 'a company constitution is 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 constitution can be adopted before a company is registered by the initial members signing the company constitution. If a company constitution is adopted after the company is registered, each shareholder must agree in writing to the terms of the constitution and the company must pass a special resolution to adopt the constitution. Please note that certain companies, such as a public company, must have a company constitution.

A company constitution is an important document for the day-to-day running of the company. It will include information such as:

  • Roles of its members
  • Appointment and removal of directors
  • Responsibility of directors
  • Directors or shareholders meeting requirements
  • Rules regarding issue of shares, rights of shareholders, and dividends

Key Clauses in a Company Constitution

Appointment and Removal of Directors

A director plays a key role in the running of the company, and it is important to have the right person in place. A company constitution may detail who has the right to appoint or remove a director and the process of doing so.  A company constitution may also detail how often the Board should meet.

Power and Duty of Directors

The company constitution sets out key duties of the directors on top of what is required under the Corporations Act. For example, a duty to act with reasonable care and diligence, a duty to prevent insolvent trading, and a duty to act in good faith and for a proper purpose. The company constitution can also include details on director renumeration.

Day-to-Day Management of the Company

The company constitution sets out the responsibilities of key players of the company, including the directors and company secretary, and also sets out shareholders’ rights and responsibilities.

Meetings and Resolutions

A company constitution will include details on how director meetings should be called, the frequency of meetings and the proceedings at general meetings. A company constitution can also include information on shareholder meetings, frequency, proceedings and passing of resolutions.


The company constitution can include information on different classes of shares, the condition on issuing or transferring shares, and how dividends can be calculated and paid to shareholders. In addition, more specific details on shares can also be included in a shareholder’s agreement.

Bookkeeping and Audit

The company constitution can include information on accounting practices and auditing requirements. This includes the rights of shareholders to inspect the books of the company.

Frequently Asked Questions



Commercial & Corporate Lawyers

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