Company Constitution in Australia (2026): Replaceable Rules, What to Include and How to Change It

Every Australian company has a rulebook, even if nobody in it has ever read one. This guide is for founders setting up a Pty Ltd, business partners bringing in a new shareholder, and directors who have inherited a company and want to know which rules actually govern it. It explains the choice between the Corporations Act's replaceable rules and your own constitution, the rules that matter most in a small company, what a good constitution covers, how to adopt or change one, and when ASIC needs to see it — with a worked example for a three-founder company.

Quick answer

A company constitution is the document that sets the company's internal rules. A proprietary company doesn't have to have one: it can rely on the replaceable rules in the Corporations Act, adopt a constitution, or combine the two. To adopt a constitution after registration, or to change or repeal one, members pass a special resolution (75% of votes cast). Proprietary companies don't lodge their constitution with ASIC; public companies do, within 14 days.

• Default for Pty Ltd companies: the replaceable rules

• A constitution is needed to change any replaceable rule

• Must have one: special purpose companies (e.g. SMSF trustees) and no liability companies

• Sole director + sole shareholder: separate rules in the Act apply

• No ASIC fee for a Pty Ltd to adopt or change a constitution

What a company constitution is

The Corporations Act lets a company run its internal affairs under a constitution, the replaceable rules, or a combination. A constitution is a written set of rules covering who can be a director, how meetings are called, how shares are issued and transferred, how dividends are paid and what happens when someone wants out. ASIC describes it as a contract between the company and its members, directors and secretary, and between the members themselves. That contractual effect is what gives it teeth: a member can enforce it against the company, and the company can enforce it against a member.

A constitution sits under the law, not above it. Whatever it says, the company and its officers still have to follow everything else in the Corporations Act — directors' duties, financial records, the ASIC annual review, insolvency rules. A constitution can't, for example, excuse a director from acting in good faith.

Older companies may have a "memorandum and articles of association". Companies registered before 1 July 1998 were set up with those two documents, and unless they've since been replaced they generally still operate as the company's constitution. If you've inherited one, read it — it may contain rules quite different from today's replaceable rules.

Replaceable rules vs a constitution

The replaceable rules are default governance rules scattered through the Corporations Act. Section 141 lists them in a table, and ASIC publishes the full text grouped by topic. They're called "replaceable" because a constitution can displace any of them. If a company has no constitution, all of them apply; if it has a constitution that is silent on a topic, the matching replaceable rule fills the gap.

There's one important exception. The replaceable rules don't apply to a proprietary company whose sole director is also its sole shareholder. That company has its own short set of rules in the Act — for example, section 198E says the single director manages the business and can exercise the company's powers. For a genuine one-person company, those rules are often enough on their own.

Replaceable rules vs your own constitution

Point	Replaceable rules only	Constitution
Cost to set up	Nothing — they're in the Act	Drafting cost (private provider or lawyer); no ASIC fee for a Pty Ltd
Flexibility	One-size-fits-all	Tailored to your owners and plans
Can change the default rules?	No	Yes — any replaceable rule can be displaced
Share classes and special rights	Not addressed in detail	Can set out classes, rights and restrictions
Special purpose company rate	Not available	Required to qualify
How rules change	Only when Parliament amends the Act	Special resolution of members
Typical user	Simple company with aligned owners	Several owners, trustee companies, investors

Cost to set up

Replaceable rules only

Nothing — they're in the Act

Constitution

Drafting cost (private provider or lawyer); no ASIC fee for a Pty Ltd

Flexibility

Replaceable rules only

One-size-fits-all

Constitution

Tailored to your owners and plans

Can change the default rules?

Replaceable rules only

No

Constitution

Yes — any replaceable rule can be displaced

Share classes and special rights

Replaceable rules only

Not addressed in detail

Constitution

Can set out classes, rights and restrictions

Special purpose company rate

Replaceable rules only

Not available

Constitution

Required to qualify

How rules change

Replaceable rules only

Only when Parliament amends the Act

Constitution

Special resolution of members

Typical user

Replaceable rules only

Simple company with aligned owners

Constitution

Several owners, trustee companies, investors

The replaceable rules that matter in a small company

Most of the replaceable rules are uncontroversial. A few have real consequences for small companies, and they're the ones to read before deciding you don't need a constitution.

Directors manage the business. Under section 198A, the business is managed by or under the direction of the directors, who can exercise all the company's powers except those the Act or the constitution reserve for members. Directors can issue shares and borrow without asking members.

Members can remove a director by ordinary resolution. In a proprietary company, section 203C lets members remove a director and appoint a replacement by resolution — a simple majority of votes. A shareholder with more than half the votes can therefore remove a co-founder from the board.

Directors can appoint directors, but members must confirm. Under section 201H, directors can appoint another director; in a proprietary company the appointment lapses unless members confirm it by resolution within two months.

Quorums are two. Unless the directors decide otherwise, a directors' meeting needs two directors (s248F) and a members' meeting needs two members (s249T). Directors' resolutions pass by majority, and the chair has a casting vote (s248G) — which can hand control to whoever chairs a two-director board.

New shares go to existing holders first. Section 254D requires directors of a proprietary company to offer new shares of a class to existing holders of that class in proportion to their holdings, unless members authorise otherwise by resolution. That protects minority owners from dilution — and slows down a capital raise.

Directors can refuse to register a share transfer for any reason. In a proprietary company, section 1072G lets directors refuse to register a transfer without giving a reason. Good for keeping out strangers; frustrating for a shareholder trying to sell.

Dividends are at the directors' discretion. In a proprietary company, section 254W(2) lets directors pay dividends as they see fit, subject to the terms of the shares. There's no automatic right to a dividend.

Directors' pay is set by members. Section 202A says directors are paid what the company determines by resolution, and can be reimbursed for proper expenses.

When a company needs a constitution

ASIC is clear on the legal minimum. You must have a constitution if you want to change any part of a replaceable rule, and two types of company can't use the replaceable rules at all: no liability public companies (typically mining explorers) and special purpose companies that want the reduced annual review fee. For a special purpose company — such as a company that acts solely as trustee of a self-managed super fund — the constitution has to contain the restrictions that qualify it for the lower A$70 fee, including a ban on distributing income or property to members.

Beyond the legal minimum, these are the common practical reasons to adopt one:

• Several owners with different stakes. You may want to require unanimous consent for removing a founder, issuing shares or selling the business.
• Different classes of shares. If some shares carry votes but no dividends, or dividends without votes — common in family companies and with investors — a constitution sets out those rights clearly.
• A trustee company. A company that acts as trustee usually adopts a constitution so its powers and any restrictions tied to the trust are written down. Our guide to trusts for business explains why corporate trustees are common.
• Bringing in investors. Investors usually want specific protections — information rights, board seats, vetoes — written into the governing documents.
• Planning for exits and deaths. What happens to a deceased shareholder's shares, or to a director who leaves, is far easier to manage if the rules say so in advance.

What a constitution should cover

ASIC suggests a constitution should explain the company's governance, who can do what, meetings of directors and members, shares and dividends, and anything else important to your company. In practice, a well-drafted small-company constitution covers:

Topics a small-company constitution usually covers

0/11

• Appointment, removal, rotation and number of directors
• Directors' meetings: notice, quorum, chair, casting vote, circulating resolutions
• Members' meetings: notice, quorum, proxies, voting rights, written resolutions
• Share classes and the rights attached to each
• Issuing new shares and any pre-emption rights
• Transfers: restrictions, rights of first refusal, drag-along and tag-along
• Dividends and how they're declared
• Directors' remuneration and expenses
• Execution of documents and use of a common seal (optional)
• Any further requirements before the constitution itself can be changed
• Special purpose restrictions, if the company is a super trustee or not-for-profit

Share Print

Keep the constitution and a shareholders' agreement in their proper lanes. The constitution is the company's governing document and binds everyone who becomes a member. A shareholders' agreement is a private contract between the owners that can deal with commercial matters — buy-out formulas, non-compete promises, funding obligations, dispute resolution — and usually can only be changed with everyone's consent. When the two conflict, the result depends on how they're drafted, which is why the shareholders' agreement normally says it prevails between the parties and requires them to vote to change the constitution if needed.

How to adopt a constitution

The process depends on timing.

Before registration. Each person who has agreed to become a member agrees to the constitution in writing. In practice, the constitution is signed alongside the member consents you collect when you register the company, and the registration application records that the company will be governed by a constitution.

After registration. Members must pass a special resolution: at least 75% of the votes cast by members entitled to vote. ASIC notes that the notice of a meeting to consider a special resolution is generally three or four weeks depending on the company type — for a proprietary company the standard is 21 days, which members can agree to shorten. Proprietary companies with more than one member commonly pass the resolution without a meeting, by a circulating resolution signed by every member entitled to vote. A one-member company simply records and signs the resolution.

A court can also order a company to adopt a constitution, though that's rare outside disputes.

The constitution takes effect from the date the special resolution is passed, or a later date if the resolution specifies one.

Adopting or changing a constitution after registration

1. 1

   Draft the document

   Start from your current rules (replaceable rules or the existing constitution) and mark every change. If your company is a super trustee, check the special purpose terms are included.

2. 2

   Check for extra hurdles

   Read the current constitution for any further requirement before it can be changed — such as a particular member's written consent.

3. 3

   Directors resolve to put it to members

   Record a directors' resolution approving the draft and calling a meeting or circulating a written resolution.

4. 4

   Members pass a special resolution

   At a meeting on proper notice (21 days for a proprietary company unless shortened) or by circulating resolution signed by all members entitled to vote.

   Tip: A circulating resolution needs every eligible member to sign — one holdout means you need a meeting.

5. 5

   File it and, if public, tell ASIC

   Keep the signed resolution and the constitution with the company records. Public companies lodge Form 205 and the constitution within 14 days.

   ASIC — Adopt or change a constitution

Changing or repealing a constitution

Changing a constitution, or repealing it entirely, also requires a special resolution. The Act lets a constitution add a further requirement before a change takes effect — for example, that a named founder must consent, or that a higher percentage must vote in favour. If your constitution has such a clause, the special resolution alone isn't enough, and unless the constitution says otherwise, that further requirement can only be removed by satisfying it.

If the company repeals its constitution and doesn't adopt a new one, the replaceable rules apply automatically. A company is never without rules.

Members with a different class of shares have extra protection: changing the rights attached to a class generally needs the consent of that class as well as the general special resolution, under the constitution or the Act's class-rights provisions. And any member who believes a change is being used to treat them unfairly can apply to court under the oppression provisions, which give the court wide powers, including to undo the change. A 75% majority is a voting threshold, not a licence.

Does ASIC need a copy?

Only some companies must tell ASIC. Public companies, and proprietary companies that have applied to become public, must lodge a copy of the special resolution and the new or changed constitution on Form 205 within 14 days, or late fees apply. Proprietary companies don't lodge their constitution or the resolution — including special purpose proprietary companies, which keep the constitution with their own records. Some online guides say every company must lodge within 14 days; ASIC's guidance says otherwise.

Worked example: three founders, one rulebook

Saltbush Software Pty Ltd was registered in Brisbane two years ago using the replaceable rules. It has three shareholders and three directors: Kai and Leah hold 400 shares each, and Sam holds 200. A new investor wants to buy 100 new shares, and the founders realise the replaceable rules don't match how they want to run the company.

What the replaceable rules mean for them today. Kai and Leah together hold 80% of the votes, so under section 203C they could remove Sam as a director by ordinary resolution without his agreement. Under section 254D, the new shares must first be offered to the existing holders in proportion to their holdings unless members pass a resolution approving a different issue. And under section 1072G, the directors could refuse to register a transfer if Sam ever tried to sell his shares to an outsider, without giving a reason.

The vote maths for a new constitution. A special resolution needs 75% of votes cast. If all 1,000 shares vote, Kai and Leah's 800 votes clear the bar on their own — Sam's 200 can't block it. That's legal, but it's exactly the situation in which a minority holder might later argue oppression. Because a circulating resolution needs every member's signature, Sam's refusal to sign would also force a meeting on 21 days' notice.

Saltbush Software — the vote maths

1,000

Shares on issue

Kai 400 · Leah 400 · Sam 200

75%

Needed for a special resolution

750 votes if all shares vote

800

Kai + Leah together

Enough without Sam

100%

Needed for a circulating resolution

Every eligible member signs

What they agree. The three founders negotiate a constitution that requires unanimous member approval to remove a founder director while they hold at least 15% each, keeps pre-emption for new shares but lets members waive it for an approved investor round, and adds a right of first refusal on transfers. They write in a further requirement that these protections can only be changed with the consent of each founder. Because everyone agrees, they sign a circulating resolution the same day.

The cost. ASIC charges Saltbush nothing — as a proprietary company it doesn't lodge the constitution — and the company avoids late fees because there's no lodgement deadline. Their only cost is the lawyer's drafting fee. They later issue the investor's shares and notify ASIC of the new shareholding within 28 days.

Common mistakes and how to fix them

Assuming the company has no rules. Every company is governed by something: the replaceable rules, an old memorandum and articles, or a constitution. Fix: find out which, and read it before a dispute starts.

Buying a template and never reading it. Standard constitutions often include rules — directors' casting votes, broad share issue powers — that don't suit your ownership split. Fix: read every clause on control, share issues and transfers, and tailor it.

Relying on the replaceable rules in a 50/50 company. Two equal owners and a chair's casting vote can hand control to one side. Fix: remove the casting vote and add a deadlock process in the constitution or shareholders' agreement.

Lodging a Pty Ltd constitution with ASIC. It isn't required and doesn't make the document "official". Fix: keep the signed constitution and resolutions in the company register.

Changing the constitution without checking the old one. If it contains a further requirement, a special resolution alone won't validly change it. Fix: read the amendment clause first.

Claiming the special purpose fee without the right clauses. An SMSF trustee company that relies on replaceable rules can't qualify for the A$70 fee. Fix: adopt a compliant constitution and tell ASIC on Form 484 before the next review date.

Official links

• ASIC — Company rules and constitutionsReplaceable rules vs constitution
• ASIC — The replaceable rulesFull text of every replaceable rule
• ASIC — Adopt or change a constitutionSpecial resolution and Form 205
• ASIC — Special purpose companiesConstitution terms for the lower fee
• Corporations Act 2001Sections 134–141 and the replaceable rules table

What to do next

If you're registering a new company with more than one owner, decide on the constitution before you lodge — it's easier to agree rules while everyone is getting along. Our guide to registering a company in Australia covers the rest of the setup, including the ABN registration that follows, and our business plan generator can help you set out who owns and decides what before you sit down with a lawyer.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Does a Pty Ltd company need a constitution in Australia?

No. A proprietary company can run on the replaceable rules in the Corporations Act, a constitution, or a mix of both. You need a constitution only if you want to change any replaceable rule, or if the company must have one — such as a special purpose company paying the lower ASIC review fee. A sole director who is also the sole shareholder is covered by separate rules in the Act.

How do you change a company constitution?

Members pass a special resolution — at least 75% of the votes cast by members entitled to vote — at a meeting or, in a proprietary company, usually by a circulating resolution signed by all members. If the constitution adds extra requirements for a change, those must also be met. Public companies then lodge Form 205 and the new constitution with ASIC within 14 days.

Do I need to lodge my constitution with ASIC?

Not if you're a proprietary company. ASIC only needs a copy of a new or changed constitution from public companies and from proprietary companies that have applied to become public. Proprietary companies, including special purpose companies, keep the constitution with their own records.

What is the difference between a constitution and a shareholders' agreement?

A constitution is the company's governing document; under the Corporations Act it operates as a contract between the company, its members, directors and secretary, and it can be changed by a 75% special resolution. A shareholders' agreement is a private contract between the owners and usually needs everyone's consent to change. Many companies with several owners use both.

What happens if my company repeals its constitution?

The replaceable rules in the Corporations Act apply automatically. If the constitution is silent on a topic that a replaceable rule covers, that replaceable rule applies too, so a company is never without governing rules.

How much does a company constitution cost?

ASIC charges nothing for a proprietary company to adopt or change a constitution, because nothing is lodged. The cost is in drafting: registration providers often bundle a standard constitution, and lawyers charge for tailored ones. Those are private fees, not government fees, so compare what's included.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Company rules and constitutions — Australian Securities and Investments Commission · accessed 12 October 2026
2. 2.The replaceable rules for company governance — Australian Securities and Investments Commission · accessed 12 October 2026
3. 3.Adopt or change a company constitution — Australian Securities and Investments Commission · accessed 12 October 2026
4. 4.Special purpose companies — Australian Securities and Investments Commission · accessed 12 October 2026
5. 5.Corporations Act 2001 (table of provisions) — Federal Register of Legislation · accessed 12 October 2026
6. 6.Wind up a solvent company — Australian Securities and Investments Commission · accessed 12 October 2026
7. 7.Amending a company constitution under the Corporations Act — Sprintlaw (law firm) · accessed 12 October 2026
8. 8.Memorandum and articles of association: an explainer — Lawpath · accessed 12 October 2026