Many company title buildings are regulated by outdated memoranda and articles of association. A lot of companies are looking to update their memoranda and articles of association by replacing them with a modern company title constitution.
Benefits of updating a Company Title Constitution
There are a number of benefits associated with moving to an up-to-date constitution.
- First, purchasers and mortgagees are more comfortable with an up-to-date document. Further, existing shareholders may not wish to be directors for fear of having to implement a document that they do not fully understand.
- Secondly, many old memoranda and articles of association do not deal adequately with a lot of the major issues which affect company title buildings today, including renovations and short-term leasing.
- Thirdly, many old memoranda and articles of association contain defunct or vestigial provisions which no longer serve a purpose. These do little more than clutter and complicate what is already a difficult document.
- Fourthly, most old memoranda and articles of association have an inflexible list of costs that can be levied on shareholders, and a narrow range of mechanisms for recovering levies. This can undermine the financial sustainability of the company.
- Fifthly, many old memoranda and articles of association set interest rates or fees that are extortionate by contemporary standards. These interest rates and fees may be unenforceable.
- Sixthly, companies who have not recently updated their constitution do not have the benefit of being able to apply the replaceable rules in the Corporations Act 2001 (Cth) to fill gaps in their constitution. Further, many old memoranda and articles of association do not sit easily with the mandatory provisions of the Corporations Act and contemporary governance practices.
- Seventhly, many old memoranda and articles of association do not clearly differentiate between ‘common’ areas and a shareholder’s unit.
Get in touch
Please get in touch on (02) 9199 8597 or email us to learn more about how your company title building can update its constitution. We have a model constitution that we can tailor to your building.
The information contained in this post is current at the date of editing – 19 Augustl 2024.