Company law is regulated by a national scheme under which each state and territory adopted certain provisions of the Corporations Act 1989 (a Federal statute) in its jurisdiction. The Corporations Act contains the Corporations Law which applies to companies, securities and futures law in Australia. In addition each state and territory conferred powers on the Australian Securities Commission ('ASC'), which regulates company law in Australia.
The activities of companies listed on Australian Stock Exchange Limited are also regulated by the exchange's Listing Rules.
Types of companies
For persons wanting a company which can carry on any kind of business or activity in Australia there are 4 choices:
company limited by shares (both public and proprietary)
company limited by guarantee
company limited by both shares and guarantee
unlimited company (both public and proprietary).
When proposed corporate law reform is made companies limited by both shares and guarantee will no longer be available.
By far the most common types of company are public and proprietary companies limited by shares. Each member contributes capital to the company by subscribing and paying for shares. Each member's liability will be limited to any amount unpaid on shares held by that member.
A proprietary company is a private company designed for a relatively small group of persons (maximum of 50 members). It cannot invite the public to subscribe for its shares or to lend money to it. The company can also place restrictions on the transfer of its shares.
A public company, on the other hand, may have a much larger membership and is not subject to these restrictions.
A small proprietary company (determined by the size of gross revenue and gross assets and the number of employees) has less onerous ongoing administrative obligations and is suitable for a foreign company wanting a separate presence in Australia.
Application is made to the ASC on behalf of the original members on adoption of the company's constitution. A company, unless restricted by its constitution, has the capacity of a natural person.
Each company is allocated an Australian company number ('ACN'), a unique identifying number on incorporation.
Incorporation in one state or territory entitles the company to carry on business anywhere in Australia.
Each company must:
register its name
have a registered office
appoint the directors and other officers prescribed for its type
lodge returns and accounts as prescribed for its type and circumstances.
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The information contained in this article has been prepared by the Minter Ellison Legal Group. Professional advice should be sought before applying the information to particular circumstances.
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