Here's the crux of it: IF YOUR COMPANY DOESN’T HAVE A CONSTITUTION ITS INSURANCE COVER MAY NOT PROTECT YOU AS A DIRECTOR OR EMPLOYEE.
More than likely your company has a number of insurance policies, including public and statutory liability, that state they also cover directors, officers and employees of the company for their liability. Great, you may think, if I’m pulled into a legal case in my position as director, the company’s insurance will also cover my liability.
Unfortunately, if your company does not have its own constitution the policy could be invalid when it comes to covering directors & officers. This is because the default provisions of the Companies Act 1993 will apply if you do not have your own constitution, and these default provisions prohibit the company from arranging insurance for a director or employee of the company. The Act doesn’t state what happens if you have arranged such insurance without a constitution that allows you to do so, but it could potentially give an insurer grounds to decline a claim on this basis.
Check your company’s records via the Companies Office website to see if you have a constitution filed. If not, you can buy a standard form one online, or speak to your lawyer about writing your own.