Company Constitutions in Singapore

                                     Company Constitutions in Singapore

In Singapore, the constitution of a company serves as the foundational document that outlines how the company is organized and operates. It details the objects of the company and governs the rights, powers, duties, and obligations of the company, its board of directors, and its shareholders. This guide will walk you through the essentials of drafting, registering, and amending a company constitution in Singapore.

Understanding the Company Constitution

Before 3 January 2016, companies in Singapore had two key constitutional documents: the Memorandum of Association and the Articles of Association, collectively known as the M&AA. These documents defined the company’s essential features and regulated the relationship among its members and between the members and the company. However, with the enactment of the Companies (Amendment) Act 2014, all companies incorporated on or after 3 January 2016 are required to adopt a single-document constitution.

Key Components of a Company Constitution

1. Drafting Your Company Constitution

The constitution of a company must include the following essential elements as mandated by Section 22 of the Companies Act (CA):

- Company Name:  Clearly stated.

- Liability Clause: 

  - For companies limited by shares: A statement that members' liability is limited.

  - For companies limited by guarantee: A statement that members are liable to contribute up to a specified amount in case the company winds up.

- Subscriber Clause: Full names, addresses, and occupations of the members.

- Statement of Intent: A declaration from the members about their intention to form a company and subscribe to a stated number of shares.

Additional Terms to Include

While the above components are mandatory, you may also include additional terms tailored to your company's needs:

- Shares: Regulations on issuing, allotting, and transferring shares.

- Meetings: Guidelines for organizing and conducting board and shareholder meetings.

- Directors: Procedures for appointing and removing directors, as well as defining their duties and powers.

- Profits: Policies on the distribution and capitalization of profits.

- Winding Up: Distribution of surplus assets if the company is wound up.

Model Constitution

To simplify the drafting process, the Singapore Companies Act provides a Model Constitution. This model is available in two schedules: one for private companies limited by shares and another for companies limited by guarantee. These templates can be found on the Accounting and Corporate Regulatory Authority (ACRA) website and can be adopted fully or customized as needed.

Registering Your Company Constitution

Once you have drafted your constitution, the next step is to register it. According to Section 19 of the CA, the constitution must be submitted to ACRA during the incorporation process. If you choose to adopt the Model Constitution without amendments, you only need to indicate this during registration, without any further submission required.

Effects of the Company Constitution

The company constitution functions as a binding contract between the company and its members, and among the members themselves. Under Section 39(1) of the CA, any member can enforce the constitution or restrain breaches of its provisions. For example, a member can enforce their voting rights at meetings if denied. However, these rights apply only in their capacity as members and not in a personal capacity.

Amending the Company Constitution

Amendments Not Involving Company Objects

If you need to amend the constitution without altering the company’s objects, follow these steps as outlined in Section 26 of the CA:

- Special Resolution: Requires more than 75% of members' votes.

- Notice Period: 14 days for private companies and 21 days for public companies.

- Filing: Submit the amended constitution to ACRA within 14 days of passing the resolution.

Altering the Company’s Objects

To alter the company’s objects, follow the procedure in Section 33 of the CA:

- Special Resolution: The resolution must focus solely on altering the objects.

- Notice Period: 21 days’ written notice for the Extraordinary General Meeting (EGM).

- Lodging the Resolution: The special resolution cannot be filed with ACRA until 21 days after it’s passed. After this period, the company has 14 days to lodge the resolution with ACRA.

Conclusion

Creating a comprehensive company constitution is crucial for governing your company's operations and ensuring compliance with legal requirements. By understanding the key components, additional terms, and the processes for drafting, registering, and amending your constitution, you can ensure your company is well-structured and prepared for future growth.

For professional assistance in drafting or customizing your company's constitution, consider engaging a corporate secretarial service to ensure all regulatory and business-specific needs are met.

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