There are three ways in which a company can be governed:

Replaceable Rules

Replaceable rules are a basic set of rules for managing a company that can be found in the Corporations Act. Replaceable rules don’t apply to a proprietary company if the same person is the sole director and sole shareholder.

Constitution

A constitution for a company can be created before or after registration. ‘No Liability’ public companies and ‘Special Purposes’ companies need to be governed by a constitution. If it is outlined and agreed upon before registration, each company member must agree to the terms of the constitution in writing. If a constitution is created after registration, the company must pass a special resolution to adopt the constitution.

A combination of both

If a proprietary company has just one officeholder, they don’t need to follow replaceable rules or have a constitution. If another director or member is appointed, replaceable rules automatically apply. However, this can be changed to a constitution at a later date.