Company Limited by Guarantee Constitution | s.150 & ACNC

A company limited by guarantee (CLG) is a public company with no share capital, where each member's liability is capped at a nominal amount they promise to contribute if the company is wound up. That promise is the guarantee, and it is why the structure suits charities: there are no shareholders, no dividends, and nobody can profit from selling a stake. The guarantee amount must be stated in the constitution, and it is a mandatory clause that cannot be left out or fixed at zero. Most organisations set it at a token figure so members face no meaningful financial exposure.

The constitution is the internal rulebook. It governs how members join and leave, how the board is elected and removed, how meetings run, how conflicts are declared, and what happens to surplus assets if the company closes. Do not confuse it with the older memorandum and articles of association, a two-document format retired years ago; a modern CLG has a single constitution. It is also different from an incorporated association rule book, which sits under state legislation rather than the Corporations Act. Where the two structures diverge most is reach and credibility: an incorporated association is registered in one state and can be awkward when operating nationally, while a CLG is a Commonwealth company recognised everywhere. If you are still weighing the two structures, our incorporated association constitution for Australian non-profits covers the state-based alternative in detail.

A CLG constitution answers to two regimes that overlap. The base layer is the Corporations Act 2001 (Cth), which treats every company limited by guarantee as a public company and imposes duties on directors, rules on meetings, and requirements around auditors. The Act also contains a default set of replaceable rules, but a charity cannot rely on them alone. They are not written for not-for-profits, and critically they do not contain a not-for-profit clause or a winding-up clause, both of which the ACNC insists on. Your constitution must make clear that the replaceable rules do not apply and set out tailored provisions instead. The ACNC has said plainly that a governing document which fails to lock in not-for-profit operation will be sent back for amendment before registration is granted.

The second layer applies the moment you register as a charity: the Australian Charities and Not-for-profits Commission Act 2012 (Cth) and the ACNC Regulation 2013, including the six ACNC Governance Standards. Registration switches off several Corporations Act obligations (much of the meeting and reporting machinery moves to the ACNC), though the auditor provisions still bite, so a charity may still need to appoint an auditor and notify ASIC if that auditor resigns. The Standards require the company to remain not-for-profit and pursue its charitable purposes (Standard 1), stay accountable to members (Standard 2), and ensure its responsible persons, meaning the directors, are not disqualified and meet their duties (Standards 4 and 5). The ACNC's own guidance on companies limited by guarantee is the clearest official summary of how the two regimes interact, and the ACNC guidance on companies limited by guarantee and their obligations is worth reading alongside this template. One further point catches founders off guard: the default name must end in Limited, and dropping that word requires a separate ASIC application under section 150 of the Corporations Act, available only to registered charities that do not pay their directors.

The most common trigger is registering a new charity from scratch. You have a cause, a founding group, and a plan to seek grants or tax concessions, and you have decided the CLG structure fits because you will operate nationally or hold significant funds. Before ASIC will register the company and before the ACNC will grant charity status, you need a constitution with compliant objects, non-distribution and winding-up clauses. Filing with generic articles or the bare replaceable rules simply does not clear the ACNC threshold.

Converting or upgrading is the next scenario. An unincorporated group that has outgrown a handshake arrangement, or an incorporated association that keeps hitting the ceiling of single-state registration, moves to a CLG to gain national standing and easier access to larger funders. Growth and funding conditions push others across the line: major grant-makers and government tenders frequently require an incorporated body with a proper governing document, audited accounts, and evidence that the board approved its own policies. A CLG constitution is the backbone that makes those ACNC governance and compliance requirements achievable rather than aspirational.

There is also the amendment case, which people underestimate. Changing your objects, adding a membership class, altering the guarantee amount, or applying to drop Limited from the name each requires a special resolution of members, and the ACNC must be notified of the change through the Charity Portal. Skip the notice period or fall short of the voting threshold and the amendment is invalid, which can stall bank signatory changes and grant agreements until you redo the meeting properly.

• The charitable objects clause states the exclusively charitable purpose the company is formed to pursue, drafted to align with a subtype recognised under the Charities Act 2013 (Cth). This is the clause the ACNC reads first, and vague or commercial-sounding purposes are the single most frequent reason registration is delayed.
• The not-for-profit clause prohibits distributing income or assets to members while the company operates, expressly overriding any inconsistent provision elsewhere in the document. It is a mandatory clause and cannot be softened; without it the company is not eligible for charity registration.
• The winding-up clause directs that any surplus assets remaining after debts are paid go to another charity with similar purposes and an equivalent non-distribution rule, decided by special resolution at or before winding up. This gift-over provision reassures the ACNC that charitable assets stay in the charitable sector.
• The members' guarantee clause fixes the nominal amount each member agrees to contribute on winding up, a figure the Corporations Act requires to appear in the constitution. Most templates set a token sum so members carry no real exposure.
• The directors and meetings provisions govern how responsible persons are appointed, when they cease to hold office, how board and general meetings are called, and the thresholds for ordinary and special resolutions. These reproduce or adapt Corporations Act requirements while remaining workable for a small board.
• The conflict of interest provisions require directors to declare material personal interests and to abstain from the relevant vote, with a register to record it, which is exactly what ACNC Governance Standard 5 and funder due diligence expect to see.

A CLG is a Commonwealth company, so unlike an incorporated association it does not change form from state to state. That is one of the structure's real advantages: the Corporations Act and the ACNC regime apply uniformly across every state and territory, and the same constitution is valid whether the registered office is in Sydney, Perth, or Hobart. You do not draft a NSW version and a Victorian version the way you would for association rule books.

State law still reaches the organisation on the operational edges, and the constitution should not pretend otherwise. If the charity fundraises from the public, state and territory fundraising licensing regimes apply on top of ACNC registration, and these differ meaningfully between jurisdictions in thresholds and reporting. If the charity works with children, each state and territory runs its own working with children check scheme, and the board should build screening into its governance rather than its constitution. Employment is the other cross-border reality: hire staff anywhere in Australia and you operate under the Fair Work Act 2009 (Cth) like any other employer, which is where a compliant Australian employment contract template and, for unpaid help, a volunteer agreement and handbook drafted to the Fair Work Act protect the organisation. The point to hold onto is that the constitution is national, but compliance around it is layered with state obligations the board must track separately.

You start by confirming the structure is right for you, because the constitution assumes a public company limited by guarantee intending to register as a charity, not an incorporated association or a company limited by shares. From there you insert the company's proposed name, remembering that it carries Limited unless and until ASIC grants a section 150 exemption. The heart of the exercise is the objects clause, where you state your charitable purpose precisely enough that it maps to a recognised charity subtype; this is where founders should slow down and get the wording exact. You then set the members' guarantee amount, typically a nominal figure, and confirm the not-for-profit and winding-up clauses, which are mandatory and should be left as drafted rather than edited.

Next you tailor the operational provisions to how your board actually works: the number of directors, quorum, notice periods, and whether members meet annually. Once the document is complete you download it in editable Word and clean PDF format, have the founding members adopt it, and lodge the company registration with ASIC before applying to the ACNC for charity status. If you are also assembling board policies, our charity governance pack aligned with the ACNC standards slots in alongside the constitution.

The mistake that sinks the most registrations is a weak objects clause. Founders describe what the organisation does in plain, commercial-sounding language rather than framing it as an exclusively charitable purpose, and the ACNC bounces the application. Close behind is relying on the replaceable rules or borrowing a company-limited-by-shares template, both of which lack the not-for-profit and winding-up clauses the ACNC treats as non-negotiable. A third recurring error is leaving out or zeroing the members' guarantee amount, which the Corporations Act requires to be stated; a constitution missing that figure is defective on its face.

The other cluster of mistakes happens after adoption. Boards amend the constitution by a casual committee vote rather than the special resolution the Act and the document itself demand, then discover the change is invalid when a bank or funder asks for evidence. Others forget to notify the ACNC of the amendment through the Charity Portal, which is a standing obligation. And many assume dropping Limited from the name is automatic once they are a charity, when in fact it needs a separate ASIC application under section 150 and only applies where directors are unpaid. Treating the constitution as a file-and-forget document, rather than a live instrument the board must follow to the letter, is the thread running through all of these. Boards that also maintain a proper AGM minutes and resolutions pack for Australian non-profits tend to avoid the procedural traps entirely.