Company Constitution
What is a company constitution?
A company constitution is a legal document that outlines the rules governing how a company operates. It replaces or supplements the standard rules provided by the Companies Act – known as the “MOI” or Memorandum of Incorporation – and allows shareholders to customise how the company is run.
While most South African companies use the default CIPC MOI, adopting a custom constitution can give you more flexibility over decision-making, shareholder rights, and internal processes.
Do I need a company constitution?
No, you don’t need a company constitution to register your business in South Africa. By default, your company will be governed by the standard MOI provided by CIPC, which covers most common scenarios.
However, some companies – especially those with multiple shareholders or external investors – choose to create a company constitution to formalise decision-making, shareholder rights, dispute resolution procedures, and profit-sharing rules.
Having a constitution can help avoid misunderstandings and protect all parties involved.
What’s the difference between a company constitution and the MOI?
The Memorandum of Incorporation (MOI) is a legal document required for all South African companies, and it sets out the basic structure of the company – things like shareholding, directors, and business purpose.
A company constitution goes further by allowing shareholders to customise or expand on the MOI’s provisions. In practice, the constitution can replace parts of the MOI or co-exist with it, depending on how it's drafted.
Think of the MOI as the “default settings”, and the constitution as a custom setup tailored to your specific needs.
When should I create a company constitution?
You might consider drafting a company constitution when:
- You’re starting a business with co-founders and want to clarify roles and responsibilities
- You’re bringing in investors who need specific rights or protections
- You want to structure how decisions are made, how profits are distributed, or how shares can be sold
It’s often done with legal help to ensure the document aligns with the Companies Act and protects everyone involved.
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