Amending Your Constitution Under The Corporations Act

Your company’s constitution sets the ground rules for how your business is governed - everything from appointing directors to issuing shares and holding meetings.

As your business grows, those rules may need to change. Whether you’re bringing in investors, cleaning up director powers, or modernising old provisions, amending your constitution is often the right move.

In Australia, the Corporations Act 2001 (Cth) sets clear requirements for modifying or replacing a constitution. In this guide, we’ll walk you through what the law requires, a practical step‑by‑step process, common amendments we see, and how to keep things compliant and efficient.

If the legal steps feel daunting - don’t stress. With a clear plan (and the right support), updating your governance documents can be smooth and low risk.

What Is A Company Constitution And Why Amend It?

A Company Constitution is a contract between the company, its members (shareholders) and its directors. It sets out how decisions are made, who has authority to act, and what happens in certain events (like share transfers or director vacancies).

Companies can either rely on the Act’s replaceable rules or adopt their own constitution (or a mix). Most growth‑focused companies choose a tailored constitution because it provides clarity and flexibility.

Reasons you might amend your constitution include:

• Bringing on investors and aligning rules with a shareholders’ agreement
• Updating director powers and quorum rules to suit a larger board
• Adding or refining pre‑emptive rights on share issues or transfers
• Making it easier to run virtual or hybrid meetings
• Clarifying execution of documents and authority to act on the company’s behalf
• Replacing an outdated document with a more modern template

Sometimes you’ll make targeted tweaks; other times, it’s simpler to replace the whole document. If you’re starting fresh, you can also adopt a constitution that fits your current and future plans.

What The Corporations Act Requires (Special Resolutions, Notices And Timing)

The Corporations Act provides the framework for adopting, modifying or repealing a constitution. The key rules to know:

Special Resolution (75% Approval)

Under section 136, a company can modify or repeal its constitution only by special resolution of members. A special resolution requires at least 75% of the votes cast by members entitled to vote.

Your constitution may also “entrench” tougher requirements (for example, a higher approval threshold or additional procedures). If so, those extra requirements must be met too.

Proper Notice Of The Resolution

Members must receive proper notice of the meeting and the intention to propose a special resolution, including the text or a summary of the changes. For proprietary companies, the standard notice period is generally 21 days (unless otherwise allowed under the constitution, or members consent to shorter notice where permitted).

Meeting Or Circulating Resolution

You can pass a special resolution at a general meeting or by circulating resolution (if your company type and constitution permit it). Proprietary companies typically can use circulating resolutions signed by all members entitled to vote, which can be more efficient for small cap tables.

Timing To Lodge With ASIC

After members approve the changes, the company must lodge notice of the special resolution and a copy of the modified or repealed constitution with ASIC within 14 days. Keeping to this deadline is important to remain compliant.

Class Rights And Share Variations

If your changes affect rights attached to a particular class of shares (for example, preference shares or non‑voting shares), class consent rules may apply. In many cases, a variation requires a special resolution of that class or unanimous consent of members in that class. Always check both the Act and your existing constitution before proceeding.

Step‑By‑Step: How To Amend Your Constitution

Here’s a practical workflow that keeps you aligned with the law while minimising disruption.

1) Map Your Goals And Draft The Changes

• List what’s not working and what needs to change (for example, board size, transfer restrictions, meeting rules, dividend policy).
• Decide whether you’ll amend specific clauses or replace the constitution entirely - replacement is often simpler where many sections need updating.
• Prepare a draft that’s consistent with the Corporations Act and your company’s structure.

Many companies also take this chance to align their constitution with their Shareholders Agreement so the two documents work together.

2) Get Board Sign‑Off And Call The Meeting

• Have the board consider the proposed changes and approve taking them to members.
• Prepare board minutes and, if helpful, a Directors Resolution to formally record the decision to convene a meeting and put a special resolution to members.

3) Issue Proper Notice To Members

• Send a notice of meeting with the special resolution and explanatory notes (why the changes are proposed and their effect).
• Observe the notice period and any requirements in your current constitution (for proxies, delivery method, and virtual/hybrid meeting arrangements).

4) Hold The Meeting Or Use A Circulating Resolution

• Make sure a quorum is present and voting is recorded accurately.
• For meetings, follow chair procedures and minute the outcome clearly. For circulating resolutions, verify that the form of approval meets the Act and your constitution.

If you’re convening a members’ meeting specifically for this purpose, our guide to extraordinary general meetings (EGMs) can help you check the process.

5) Finalise The Constitution And Update Company Records

• Confirm the final text that members approved and compile clean and marked‑up versions for your records.
• Ensure execution pages and document version controls are correct. When dealing with document execution practices more broadly, it helps to understand section 127 signing (by directors) and section 126 authority (agents’ authority) under the Act.

6) Lodge With ASIC Within 14 Days

• File the notice of the special resolution and lodge a copy of the modified or repealed constitution with ASIC within 14 days of the resolution passing.
• Retain ASIC receipts and keep copies with the company’s corporate records (minute book and statutory registers).

7) Communicate And Implement

• Circulate the updated constitution to directors and members.
• Update onboarding packs, board charters, and any internal checklists to reflect the new rules (for example, revised quorum or share transfer procedures).

Common Changes Companies Make (And Drafting Tips)

Every company is different, but here are frequent amendments we see - plus practical pointers.

Board And Decision‑Making

• Clarifying quorum, chair powers, tie‑break votes and director appointment/removal processes.
• Allowing written resolutions and modernising virtual meeting provisions.

Tip: Keep board mechanics simple. Complex decision rules can slow you down and cause disputes.

Share Capital And Transfers

• Pre‑emptive rights on new issues and transfers to protect existing holdings.
• Drag‑along and tag‑along mechanics for exit scenarios (in smaller companies this is often handled in the shareholders’ agreement).

Tip: Align your constitution with your Shareholders Agreement so they don’t conflict. If there’s a conflict, the constitution usually prevails.

Dividends And Distributions

• Clear rules on declaring and paying dividends, in line with the Act’s solvency requirements.

Tip: Use plain English and mirror the Act - avoid reinventing legal concepts in a way that could misfire.

Execution Of Documents And Authority

• Reaffirming how the company executes documents (for example, under section 127) and recognising the authority of officers or agents (section 126).

Tip: Consistency reduces risk. Ensure your constitution, board delegations and practical signing processes align with section 127 and section 126.

Meetings And Notices

• Updated rules for digital/hybrid meetings, shorter notice (where permissible), and proxy processes.

Tip: Technology moves fast - build in flexibility to use new platforms while staying compliant.

Entire Replacement With A Modern Template

Where a constitution is very dated or patchy, a full replacement may be cleaner. If that’s your path, consider a modern base that’s easy to maintain and amend over time. If you’re doing a ground‑up refresh, it may be more efficient to simply adopt a new constitution rather than piecemeal edits.

Constitution Vs Shareholders Agreement: Do You Need Both?

These two documents do different jobs, and many companies use both.

• The constitution is a public‑facing governance document under the Corporations Act. It binds the company, members and directors, and is hard to vary without a special resolution.
• A shareholders’ agreement is a private contract between some or all shareholders (and sometimes the company). It can cover things like founder vesting, information rights and tailored exit provisions in more detail.

If you have (or plan to have) multiple owners or investors, a well‑drafted Shareholders Agreement alongside your constitution is common. Keep the two documents consistent - for example, if the shareholders’ agreement promises pre‑emptive rights or drag/tag, the constitution should either reflect those rights or at least not contradict them.

When you update the constitution, it’s a great time to check any related documents (like your shareholders’ agreement, option plan rules, and board policies) still fit. If you’re introducing new share classes, ensure your share certificates, cap table, and issue processes match the new rules.

Practical FAQs

Can We Make It Harder To Amend The Constitution In Future?

Yes - the Act allows a constitution to include extra requirements for modification or repeal (for example, requiring 80% approval). If you add entrenchment, be sure it’s intentional and future‑proof.

Do We Have To Lodge Every Little Change With ASIC?

When you adopt, modify or repeal a constitution, you must lodge the relevant documents with ASIC within 14 days. Keep track of the exact wording members approved and submit the correct version.

What If We Use Replaceable Rules Now And Adopt A Constitution Later?

That’s fine. You can run on replaceable rules initially and later decide to adopt a constitution by special resolution. If you’re ready to move to a tailored document, you can adopt a constitution at any time following the proper process.

Do We Need A Meeting Or Can We Approve Changes In Writing?

Proprietary companies can generally pass special resolutions by circulating resolution signed by all members entitled to vote (if allowed by their current constitution). Public companies typically need a meeting. If you do hold a meeting, see our guidance on EGMs for practical tips.

Key Takeaways

• Under the Corporations Act, you can only modify or repeal your constitution by special resolution (75% approval) and must lodge the changes with ASIC within 14 days.
• Plan the changes carefully, draft in plain English, and choose between targeted amendments or a full replacement based on complexity.
• Send proper notice, record minutes, and keep your board and member approvals tidy - a clear paper trail saves headaches.
• Align your constitution with related documents like your Shareholders Agreement, board delegations, and option plan rules to avoid conflicts.
• Modernise execution and authority clauses to match everyday practice and stay consistent with section 127 and section 126.
• If your current document is outdated, consider a clean refresh and adopt a new constitution that’s easier to maintain as you scale.

If you’d like a consultation on amending your company constitution, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.