A company is a complex organisation with rules and regulations that govern how it operates. These rules and regulations are outlined in the company constitution, a comprehensive legal document required by all new companies at inception. This helpful article will provide everything you need to know regarding a company’s constitution.
What is a Company Constitution?
A company constitution is a legal document that details a company’s structure and governance, including how decisions are made, the relationships between its members, and the roles and responsibilities of company leadership and other roles. Its primary purpose is to establish corporate regulatory compliance across companies under the Companies Act of Singapore, and it is mandatory for all new companies incorporated in Singapore.
The company constitution is also essential to safeguarding members’ rights, provided those constitutional rights affect the member in his capacity as a member, not in his personal capacity. It also stipulates the necessity of one’s intention to take shares in a private company limited by shares, as well as declaring the shares to be taken.
Key Contents of a Company Constitution
A company constitution must include several mandatory components that define the company’s nature.
Company Name
This is known as the Name Clause, and provides the full, official name of the registered company.
Registered Business Address
This points to the company’s registered office address, located in the jurisdiction where it is registered and where it maintains all important company records. You may maintain a registered address under the Home Office Scheme to use your residential address for business activities, or by renting an office or using a virtual office.
Founding Member Details
Also known as the Subscriber Clause, this outlines the full names, addresses, and current occupations of the company’s founding members (Subscribers).
Member Listing
This section provides the number of members in the company at the time of incorporation.
Business Activities
This focuses on the types of business activities the company undertakes and how it conducts the daily operations of said activities.
Shares & Share Capital
This section concerns the issuance, allocation, and transfer of shares, as well as the total amount of share capital (where relevant). Private companies limited by shares are to restrict members to a total of 50 shares and limit their right to transfer company shares.
Liability of Members
The company must also state the extent of each member’s liability, including their position and liability if the company is wound up or dissolved.
Governance, Roles, and Responsibilities
This will address additional terms governing day-to-day decisions across various activities, including the nature of calling annual or extraordinary general meetings (AGMs/EGMs), the duties and powers of directors, the distribution and capitalisation of profits, and more.
Using a Model Constitution
Companies can opt to use a model constitution provided by the Accounting and Corporate Regulatory Authority (ACRA), as provided in the Companies (Model Constitutions) Regulations, 2015. The model constitution provides all relevant and mandatory details needed for a company constitution.
ACRA allows companies to adopt the model constitution in force from time to time, or at a point in time. For the former, changes to any of the model constitution’s provisions as made in the Companies Act will be adopted by your company. For the latter, once you adopt this model constitution at incorporation, it will not change until the company amends it.
Important Considerations When Drafting a Company Constitution
The company constitution is vital, as it defines the company’s overarching structure and operations. Before drafting it, keep these key criteria in mind.
Leadership Structure
As the company constitution outlines how your business will function long-term. Thus, it should clearly define core aspects, including the appointment of directors, governance matters, and the conduct of board and shareholder meetings. By doing so, you ensure compliance with existing regulatory requirements and prevent potential disputes between members.
Core Business Goals
The constitution should also align with your company’s strategic goals and objectives, ensuring that it remains consistent throughout your company’s operations.
Banking Matters
This section addresses financial and banking matters related to company activities, including the number of signatories required for specific transactions.
Meeting Matters
This section may outline how business meetings are handled, touching on aspects such as how meetings should be held (in person, via video conferencing, or hybrid methods) and the frequency of these meetings.
How to Register a Company Constitution
Once your company constitution is ready, you will need to log in to Bizfile+ with your SingPass (for first-time registrations by Singaporean residents) to submit the new company’s application. Once in Bizfile, look for and click on “Register”, followed by “Register new entity”, then click on “Apply for new business entity name” and fill in all the relevant details. During this phase, you may also be asked to upload a copy of the company constitution as a supporting document. You will need to specify that you are uploading either a model or a custom-made constitution.
After the incorporation application is completed, Bizfile will notify the appointed officers (the directors, shareholders, and company secretary) via email to request their endorsement. Each person must endorse it within 60 days of the application’s submission, or else the application will lapse and must be filed again. You will also need to pay the SGD 15 company name application fee and the company registration fee (amounts vary by company type).
Once endorsed, ACRA will process the application, and the company will be registered if the filing is properly done. ACRA will later send an e-Notification of Incorporation via email to inform you that the company constitution is now part of the official company records.
Henceforth, the company constitution becomes publicly accessible and must be kept at your registered office for inspection. Directors, shareholders, and relevant authorities may request access, while members may pay to receive a copy for their records. Banks may also review it to confirm your directors and that everything is clearly stated to facilitate all banking processes, including account openings.
Do you need assistance in creating a company constitution? My Office offers three company incorporation packages tailored to companies of varying sizes seeking incorporation in Singapore. Contact us at your earliest convenience to find out more!
