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PTY LTD COMPANY CONSTITUTION
A Proprietary Company (a Company Limited by Shares) must have a constitution. It doesn’t need to be lodged with ASIC, but a copy must be kept with the company’s records. A company must provide a current copy of the constitution to any member who requests it within seven days.
A Company Constitution is not the same as a Shareholders Agreement. If your company has more than one shareholder, you will will also need a Shareholders Agreeement
The constitution of a company sets out certain rights, roles and responsibilities of shareholders and directors and rules which govern various internal management activities such as meetings of shareholders and directors. The constitution is a fundamental component of the governance framework.
The 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 company can adopt a constitution before or after registration. If it is adopted before registration, each member must agree (in writing) to the terms of the constitution. If a constitution is adopted after registration, the company must pass a special resolution to adopt the constitution.
A company can change or repeal its constitution by passing a special resolution. A special resolution needs at least 28 days notice for publicly listed companies and 21 days notice for other company types. For the resolution to pass, at least 75% of the votes cast must be in favour.
Which companies need a constitution?
The following companies must be governed by a constitution:
- ‘No Liability’ public companies
- ‘special purpose companies’ that want a reduced annual review fee.
A proprietary company (that is a special purpose company) must have a constitution. It doesn’t need to be lodged with us, but a copy must be kept with the company’s records.
Proprietary’ means ‘private’, and is the most popular for small businesses, to hold investments and to act as a trustee for private trusts. The ‘Pty Ltd’ stands for ‘Proprietary Limited’, and is the most common form of company.
1. A single Director and single Secretary, or
2. Board of Directors with a Secretary;
3. Shareholders holding one Class of share;
4. Limited Liability
The Constitution for this Company needs to be retained with the Company Records.
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