The directors of Lipton-Herzberg Ltd and Welsh Ltd agreed to start a new business to be ownned by a new company. New Edition Pty Ltd, whose share capital would be divided into two classes as follows:

Ordinary shares-$1 issue price

400,000-lipton-Herzberg Ltd

200,000-Welsh Ltd

Preference shares-$2 issue price

100,000-phillip(director 50% shareholder of lipton-herberg ltd)

100,000-Abe(director 50% shareholder of lipton-herberg ltd)

100,000-Michelle(director 50% shareholder of Welsh Ltd)

It was agreed that Phillip, Abe and Michelle would be the first directors of New Edition, with Michelle also appointed as secretary. Lipton-Herzberg Ltd and Welsh Ltd also agreed that the internal governance rules of New Edition Pty Ltd should provide that:

1) A person nominated by Welsh Ltd must be the chair of New Edition Pty Ltd and that the chair should have both a vote as well as a casting vote at directors' meetings

2) A person nominated by Lipton-Herzberg Ltd must be the managing director New Edition Pty Ltd and that the person so appointed cannot be removed from that position unless Lipton-herzberg Ltd specifically agreed.

3) New Edition Pty Ltd's ordinary shareholder should have six votes per share and preference shareholders, one vote per share at shareholders' meetings.

4) A New Edition Pty Ltd shareholder can only transfer their shares to existing shareholders. The transfer price must be the market price as determined by an independent valuer.

Should New Edition Pty Ltd rely on the replaceable rules in the above circumstances or would a constitution be more appropriate? Explain fully