How to draft a company constitution
Drafting a company constitution starts with the key governance decisions, not the template. Here's the process.
A company constitution is drafted by working through the company’s governance needs first (share structure, decision rules, transfer restrictions, exit triggers), then translating those decisions into clauses. Templates speed up the drafting but rarely fit a specific company without amendment.
Start with governance decisions
Who’s on the board, and how do new directors join? What’s the share structure (one class or several)? What requires unanimous decisions vs majority? What restricts share transfers? What triggers a forced exit? Answer these before drafting.
Standard sections
Definitions and interpretation. Members and shares. Issue and transfer of shares. Directors. Powers and duties of directors. Meetings of members. Meetings of directors. Dividends and distributions. Accounts and audit. Indemnity. Winding up.
Tailored clauses for family businesses
Share transfer restrictions (pre-emption to existing shareholders before outsiders). Drag-along rights (forcing minority sales). Tag-along rights (protecting minority on majority sale). Specific decision thresholds for major actions. Family meeting protocols.
Adoption
Special resolution of shareholders (75%). Either at a general meeting or unanimous written resolution. Records the change in the company register. ASIC notification only required for specific items (share class changes, etc).
Summary
Drafting a company constitution starts with the key governance decisions, not the template. Here’s the process.
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Disclaimer: This article is general information only and does not constitute legal advice. Estate planning is deeply personal - every family's circumstances are different. For advice specific to your situation, please contact Rosewood Succession Solicitors.