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Singapore Company Constitution – Business Owner Must Know
The Singapore Company Constitution, previously known as two separate documents, the Memorandum of Association and Articles of Association, is an essential and crucial document that governs the governs the company’s internal management.
What is Company Constitution?
The Company Constitution is one of the statutory requirements in the company’s incorporation process. On BizFile, you have to submit the document to continue with the registration process. The Company Constitution is an essential document as it outlines rules and regulations to govern the company, and sets out the rights and relations of various members of the company, which include the company’s directors and shareholders. According to the Singapore Companies Act, the constitution of a company is legally defined as the constitution that a company registers with the Registrar. Those companies that exist before the 2014 Amendment to the Companies Act, the Memorandum and Articles of Association of the company in force immediately before the amendment date.
What is the Framework of Company Constitution?
A company needs a Constitution when it is incorporated. A Constitution contains the company’s details like the name of the company, the main purpose of the company, the nature of business, the liability of its members, and the capital amount of the company are clearly stated. Besides, the constitution also stipulates the responsibilities and rights of the directors as well as various rules regarding the internal management of the company.
The mandatory sections of the Companies Act are as follows:
- Name Clause
This section specifies the name of the company (as approved by the company registrar) where the company will use this company name in all the business dealings and documentation.
- Registered Office Clause
The company has to keep records such as statutory registers, minutes etc. at the registered office address.
- Liability Clause
This clause specifies the liabilities of its members are limited or unlimited. It also clarifies the position of members and their liability in case of dissolution of the company.
- Capital Clause
This section states the share capital amount of the company and the division of the share capital into shares of fixed value.
- Subscriber Clause
This clause specifies the full names, addresses, and occupations of subscribers to the Company Constitution.
- Objects Clause
This section states the business objectives and its activities.
What are the Key Points to Consider When Drafting a Company Constitution?
The Constitution is essential to a company. Therefore, there are many factors to consider when drafting Company Constitution:
- Business Objectives – The business objectives are the goals you have set for you and your company. It is in line with the Objects Clause in the Company Constitution.
- Decision-making Structure – This is particularly important if you have a desired structure (e.g. procedures for the election of directors) to implement in your company. This is because it will ensure your company complies with legal and compliance regulations and avoids potential conflicts among members.
- Specific Rules & Regulations –If you have specific sets of rules and regulations that are unique to your company, you should add them into your Constitution as long as they are in line with legal and compliance regulations.
- Mandatory Sections – In accordance with Section 22 of the Companies Act, there are certain mandatory sections i.e. the Name Clause, Liability Clause, and the Subscriber Clause in the Company Constitution.
Now we can see that having a Constitution is crucial to governing the management of a company. It has to ready before the incorporation of your company where it is also part of the incorporation process. If you need assistance or having trouble in drafting a Company Constitution, please do not hesitate to contact us.