Conflict with a Company’s Constitution
Setting up a new company is on a superficial level, quick and easy. However, there are intricacies to the incorporation process of which to be aware. When setting up a company many people simply tick the yes box when asked “do you need a Constitution”. However after the company is incorporated, many directors and shareholders then pay little attention to the technicalities in that Constitution. The Supreme Court of New South Wales has recently issued a judgement that should set off alarm bells to all company directors and shareholders about the need to keep their Company’s Constitution up to date and consistent with their Shareholders Agreement.
In the matter of Lesso Building Material Trading (Sydney) Pty Ltd (Administrators Appointed) (2018), the NSW Supreme Court considered the conflicting core provisions in the Company’s Constitution and its Shareholders Agreement: