Adoption of New Constitution

BACKGROUND

Since December 1995, the law governing the operation and composition of proprietary companies has eased considerably and has permitted greater flexibility. For example, until December 1995, all companies were required to have a minimum of two directors, one secretary and two shareholders.

At present, the minimum requirement under the Corporations Law is for one director and one shareholder. Which set of “rules” apply to a company: the Corporations Law or its Memorandum and Articles of Association (now referred to as a company’s Constitution).

The most restrictive set of rules will apply to the governance of the company. In other words, if a company’s Constitution requires a minimum of two directors, that company cannot be in breach of its own set of “rules” and must continue to have two directors.

If a company adopts a new Constitution, it will be able to:
- operate legally with a minimum of one director
- operate legally with a minimum of one shareholder
- avoid the need to hold annual general meetings
- avoid the need to prepare annual statutory accounts
- execute documents without a common seal
- embody all the new changes in the Corporations Law in the one document.

DO I NEED TO ADOPT A NEW CONSTITUTION?

It is common for service providers to “push” their services by making alarmist or sweeping statements to create concern in the minds of clients. Our philosophy is not to make any changes unless necessary or of decided economic or administrative advantage.

Many companies have nothing to gain by adopting a new Constitution - except another bill to pay. If you are not sure if your company’s Constitution needs to be up-dated, we can read your Constitution and give you a written report to advise of any weaknesses which may exist, given your objectives and use of the Company. This is a separate service to the adoption of a new Constitution and our fee for the perusal and report is $45.00 plus GST.

ADOPTING A NEW CONSTITUTION

If your company is to adopt a new Constitution, the power to do so is held by the shareholders of the Company and, as such, the adoption can only be dealt with at a properly convened meeting of the shareholders of the Company. A special resolution needs to be passed in order for the new Constitution to be properly adopted. Once the new Constitution has been adopted, it is often the case that other changes quickly follow.

This changes include:
- resignation of non-involved directors
- transfer of shares to the principal of the company.

LEVEL OF SERVICE

We offer three packages to deal with this process:

PACKAGE 1
We will supply four copies of the Constitution - and you will need to attend to the minutes, etc.

PACKAGE 2
We will supply the paperwork to properly convene and give notice of the general meeting, minutes of the general meeting, including the special resolution and four copies of the Constitution.

PACKAGE 3
In addition to the paperwork supplied for Package 2, this package also includes all necessary documents to deal with any consequential:
- resignations of directors and/or secretaries;
- appointment of directors and/or secretaries, where the resignations create vacancies;
- changes in the shareholding. This includes ASIC forms, new share certificates, etc.

Full details and the pricing are contained in the package comparison.

DELIVERY

Under normal circumstances:
For clients in metropolitan Melbourne, delivery will normally take 24 hours from our receipt of your order.
For clients in country Victoria or interstate, delivery will normally take 48 hours.
Delivery to any location in Australia is free.

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