Starting a Business
9. Internal Governance
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 06 Jul 2015
- The internal governance of a company refers to the rules that define the relationship between the company's activities, its directors and its shareholders.
- The governance arrangements for companies are generally more complex and more heavily regulated than for other business structures such as sole traders and partnerships though some trusts have a similar level of complexity.
- When setting up the company's internal governance you can choose to either follow the provisions of the Corporations Act 2001 (Cth) (the 'replaceable rules'), establish your own company constitution or have a combination of replaceable rules and a constitution.
- Whichever combination of rules and constitution you adopt forms a contract that binds the company itself, its officers and its shareholders to the terms contained within it.
- The rules cover elements such as:
- voting in company elections;
- the powers of the directors;
- appointment of directors;
- inspection of company books;
- how director's meetings are to be run;
- determinations about dividends; and
- the transfer of shares amongst other things.
- If you intend to establish a proprietary company and you will be the only director and shareholder you do not need to use replaceable rules or a constitution.
View more Information on Business & Company