The corporate governance rules are essentially the rules that govern the activities of the company and the relationships between the company and each member, between the members themselves, and between the company and each of its officers. These rules are derived from a number of sources, with the central source being the company's constitution, as supplemented by the Corporations Act 2001 (Cth) (CA) and the common law.

The constitution operates as a statutory contract and members have the right to enforce such statutory contract.

Members are able to modify the constitution and such rights cannot be altered by the company or by contract. That said, it is possible for shareholders to agree amongst themselves in a shareholders' agreement to exercise their voting rights in a particular manner, including agreeing not to alter the constitution except in certain circumstances.

Once a member ceases to be a member of the company, the corporate governance rules will no longer apply to the member.

See Corporate governance rules.

The board of directors is responsible for managing the company. A board may appoint a managing director who is appointed to oversee the day to day operations of the company, and such managing director is able to exercise powers delegated by the board.

The role of the company secretary is generally to perform an administrative role and their primary duties are to ensure the company fulfils its reporting requirements.

See Role of board and secretary.

Directors are under a duty imposed by the CA and general common law to exercise their powers and discharge their duties with a degree of care and diligence that a reasonable person would exercise in that position with the same responsibilities.

Directors are also under a duty to exercise their powers and discharge their duties in good faith in the best interests of the company, and to act for a proper purpose. Furthermore, directors are under a duty not to improperly use their position to either gain an advantage for themselves or someone else, or to cause detriment to the company, as well as not to improperly use information gained by virtue of being a director.

Further, directors have a general duty not to place themselves in a situation of real or possible conflict and not to have their discretions fettered.

See Directors’ duties.

The role of members is not to manage the day to day operations of the company, but rather act as owners of the company. Members are able to exercise their powers and rights in general meeting.

For example, members in general meeting have the power to change the constitution, approve certain reductions of share capital, and remove a director (particularly in the case of a public company). The division of powers between directors and members is usually set out in the company's constitution.

Members also have a statutory right to propose resolutions, call meetings to consider those resolutions, and distribute statements at general meetings of the company.

There are also other rights and powers available to members such as bringing an action to prevent the majority from improperly exercising the votes (based on the fraud on the minority principle), initiating statutory derivative actions, and seeking a winding up of the company.

See Role of shareholders.

Companies are obliged to comply with a number of financial reporting requirements under the CA and different requirements apply to different types of companies.

Every company regardless of type must keep written financial records that correctly record and explain its transactions and financial performance and position, and that would enable true and fair financial statements to be prepared and audited.

If the company is obliged to provide financial reports, it would need to comply with the content and ASIC lodgment requirements in the CA.

See Record keeping and financial reporting.