In Australia, the rules that regulate the activity of companies can be contained in either the provisions outlined in the Corporations Act 2001, known as replaceable rules, or often otherwise through the adoption of a Company Constitution. A company constitution play an essential role in regulating the activities and management of companies. However, when a company constitution is lost, or has become antiquated and requires replacement, the process of changing or replacing a constitution can be complicated.
Implementation
Company constitutions function as contractual documents regulating the relationships between a company, its directors, and its members. The constitution generally covers most essential aspects of corporate governance, including company structure, the appointment and powers of directors, corporate objectives, procedures for conducting meetings, the allocation and transfer of shares, and more. While these constitutions are legally binding documents, it is not a requirement to have one.
A company may choose to adopt a constitution either before or after registration. If adopted before registration, the written agreement of all members to the terms of the constitution must be provided. Alternatively, if adopted after registration, the company must pass a special resolution of shareholders to implement the constitution. Although a special resolution may be required for a company to change, repeal, or replace its constitution, requiring at least 28 days’ notice for publicly listed companies.
Adopting a new constitution
Like when a company adopts a constitution post-registration, the changing or repealing of a company constitution can only occur through passing a special resolution. For the resolution to pass successfully, at least 75% of votes must be cast in favour of the change. Moreover, for publicly listed companies 28 days of notice is required to hold a special resolution. According to ASIC, public companies that have changed or repealed their constitution are required to lodge a Form 205 Notification of Resolution.
In conclusion, companies wishing to repeal their constitutions, or make changes to its provisions seeking specialised advice from a lawyer can be extremely beneficial.
If you have questions regarding the process of changing or repealing your company constitution, get in touch with our corporate and commercial team on 02 9964 0499 or use the contact form below.
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