The constitution of a company sets out certain rights, roles and responsibilities of members or shareholders and directors and rules which govern various internal management activities such as meetings of members and directors. The constitution is a fundamental component of the governance framework.
The Corporations Act 2001 (Cth) does not specify the contents of a company’s constitution. However, some not-for-profit companies must have specific clauses in their constitutions for tax concessions in accordance with the Income Tax Assessment Act 1997 (Cth).
All new directors need to be aware of their duties in relation to the organisation’s constitution.
Constitutions should be reviewed regularly to stay up to date with changes to the Corporations Act 2001 (Cth) and other legislation, modern company practices and technologies.Â
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