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Constitution, by-laws, policies – what’s the difference?

By Kathy Nguyen, Senior Lawyer, Governology


In any association, the governance structure typically relies on three key documents: the constitution, by-laws, and policies. Understanding the distinction between these documents is crucial for both leadership and members.


Defining the Documents

The constitution is the foundational document of the association, functioning as a contract between the organisation and its members. It outlines the governance structure, including board composition and membership classes and voting rights. Since it acts as a contract, any changes require formal approval from the members, usually by special resolution.

By-laws derive their authority from the constitution and can be considered an extension or attachment to the constitution. The by-laws provide detailed rules for implementing the provisions in the constitution. Though they hold a degree of contractual obligation, by-laws are more flexible than the constitution. The Board can usually update the by-laws without member approval.


The Difference in Contents

Constitutions will contain matters that are so important that they require member approval and should be in the contract. These matters include the fundamental rights and responsibilities of members, such as voting rights.

Conversely, matters that give effect to provisions of the constitution or to govern the procedures and activities of the organisation and are subject to change can go into the by-laws. For example, if the constitution defines who can vote for directors, the by-laws may detail the election process.


Case Examples

A standard clause in constitutions of associations is one that gives the Board power to create by-laws (sometimes called regulations or rules) and that the by-laws are binding on the members.


It was pursuant to such a clause that the Board of the Melbourne Football Club (MFC) was empowered to make the Club’s Election Rules. These rules became the subject of allegations of oppression bought against MFC by a member, Mr Lawrence (in the case of Lawrence v Melbourne Football Club Ltd [2024] FCA 945). The court ultimately dismissed Mr Lawrence’s case and found that the MFC’s election rules were reasonable and made in good faith.


However, irrespective of how a bylaw is set and changed, it is void to the extent that it is inconsistent to the constitution. The recent case of Carabetta & Anor v Carlingford Bowling, Sports & Recreation Club [2023] NSWSC 1442 highlighted that Boards cannot circumvent the constitution by passing inconsistent by-laws.


What About Policies?

Policies are operational documents which provide guidance on how the association operates on a day-to-day basis. Unlike the constitution or by-laws, policies are not contractual. They offer direction but can be followed or adjusted based on circumstances, without the need for formal amendment or member approval.


If you would like a review of your association’s constitution, by-laws, or policies, please contact Governology at: info@governology.org or call 02 9413 9999.


Disclaimer: This article provides summarised information for general knowledge only. It does not constitute legal advice and should not be relied upon as such. Circumstances vary, so please consult a legal professional for guidance on your specific situation.

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