Companies in Australia are incorporated through registration with the Australian Securities and Investment Commission (ASIC). According to The Corporations Act 2001(C’th) (âthe Actâ), companies are defined and categorized according to the members’ liabilities.
There are two main types of companies in Australia; the Private (Proprietary) and Public companies. The proprietary companies are the most common types of companies in Australia.
Accounting services can be very different considering the kind of legal entity you set up.
Some of the notable differences between the two are that Public companies are open to investment by the public while private companies are not.
Public companies have to prepare a monetary report and a report from the director in every fiscal year while the private companies only prepare these reports if they are a huge proprietary company with revenue of $10 million, assets worth $5 million or have 50 or more employees.
These are companies that are allowed to offer shares to the general public. According to the Corporations Act, the public company must:
They can be divided into various categories
Public companies limited by shares â These are companies where the liability of the members is limited to the nominal amount of their shares. They may operate to generate commercial profits.
Public companies limited by guarantee â These companies have no share capital. The members can guarantee an amount that is fixed to contribute to the company when it is being wound up.
Unlimited Public Companies â These are companies where the liability of the members is not limited.
No liability Companies â This is a type of company with a share capital. They are commonly used when the companyâs sole purpose is mining and has no right to recover calls made on the shares if a shareholder fails to pay them.
Proprietary (Private) Companies
It is a company that is registered or converts to a proprietary company under the Corporations Act 2001(Câth). According to the Corporation Act 2001, they must:
Majority of the small businesses registered as companies in Australia are proprietary companies that are limited by shares.
Small Proprietary Company
It is a company that meets two in three criteria; the consolidated revenue for the financial year is less than $25 million, the value of consolidated assets is less than $12.5 million, or the company has less than 50 employees.
Large Proprietary Companies
It is a company that satisfies two of three conditions; consolidated financial year revenue is more than $25 million, the value of fiscal year’s consolidated assets is $12.5 million or more, or the company has 50 or more employees.
If you want to get financial help, please check small business grants first!
The Corporations Act 2001(Câth).
Australian Securities and Investment Commission (ASIC).
Australia & CCH Australia Limited. (2011). Australian corporations & securities legislation 2011. North Ryde, N.S.W: CCH Australia.