A constitution is a legal document that governs the internal management of a company. Having a constitution is generally considered to be good business management practice.

What is a Company Constitution?

A constitution is important, as it oversees the activities of a company, and sets out the rights and duties of people, such as:

members
directors, and
the Company Secretary

A company constitution also dictates the relationship between the company’s directors and its shareholders.

A company that is registered with Australian Securities & Investments Commission (‘ASIC’) is required to choose to either have a constitution that is drafted from scratch, or adopt the replaceable rules contained in the Corporations Act 2001 (Cth), or the company may elect to use a combination of both. In the event that replaceable rules are used, a company can, at any time, modify or displace the replaceable rules by way of a constitution in its place. It is important to specifically state in the constitution that it will override the replaceable rules. An exception to replaceable rules not applying is in circumstances where a company has a sole member/director, or where the member/director is one and the same person.
‍

What does a Constitution include?

A company constitution will generally include provisions in relation to:

the structure of a company;
governance of company meetings;
issue and transfer of shares;
voting procedures;
execution of company documents;
rights of shareholders and share classes;
apppointment, power and removal of directors; and
process of amending the constitution.

What are the Replaceable Rules?

Inthe absence of a constitution, a company will be governed by the default guidelines under the Corporations Act 2001(Cth), which contains a set of replaceable rules that governs a company’s internal management. The replaceable rules are a set of basic company management rules which can be a cost-effective mechanism when starting a new business. Replaceable rules apply to companies registered after 1 July 1998.

Some examples of the provisions which thereplaceable rules cover are as follows:

Offices and employees (i.e. powers of directors);
Inspection of books (i.e. allowing members to inspect the books);
Directors' meetings (i.e. how voting should be carried out); and
Shares and transfer of shares (i.e. provisions about paying dividends).

Why choose a Constitution instead of replacement Rules?

There are may be reasons why you might adopt a company constitution instead of relying on replaceable rules. Importantly, a constitution is a bespoke legal agreement that can be tailored to the specific needs of the company. In comparison, the replaceable rules are basic rules that apply to all companies. This means that they do not necessarily cover everything a company may need or require.

A constitution also allows a company broader scope and flexibility than the replaceable rules. This is because the constitution can be amended, as required, if a company’s processesor structure change, whereas the replaceable rules can only be amended through legislative reform.

How Sharrock Pitman Legal can assist?

Having an effective constitution is an essential and crucial means of governing a company’s internal affairs and management. If you are starting our own business or considering adopting a constitution for your company, it is important to obtain legal advice and arrange a lawyer to assist in drafting a constitution that meets the needs and requirements of the company. If you require assistance, please do not hesitate to get in contact with us on 1300 205 506. As Accredited Specialists in Commercial Law, we are well equipped to provide expert legal advice regarding your unique circumstances.

‍

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.‍

Written by a member of our Legal Team

For further information contact

Caroline Callegari

Caroline Callegari is an Associate Principal and leads our Disputes & Litigation team. She has an advisory and advocacy practice in the following areas: Commercial Litigation, corporate and personal disputes, debt recovery and, insolvency and bankruptcy matters. Caroline can be contacted on (03) 8561 3324.

Repudiation and Termination of a Contract

Changes to Unfair Contract Laws – Be Prepared!

Debt Collection

A constitution is a legal document that governs the internal management of a company. Having a constitution is generally considered to be good business management practice.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

Free Property Law webinar -

Land Development and Joint Ventures

What is a Company Constitution?

A constitution is a legal document that governs the internal management of a company. Having a constitution is generally considered to be good business management practice.

What is a Company Constitution?

What does a Constitution include?

What are the Replaceable Rules?

Why choose a Constitution instead of replacement Rules?