[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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generally limited to the amount (if any), which is unpaid on their shares. The most common company types are public companies and proprietary (or private) companies. A proprietary company is generally simpler and less expensive to administer than a public company because it is subject to fewer administrative requirements imposed by the Corporations Act.
The Corporations Act sets out certain tests to determine whether a company is a “large proprietary” or a “small proprietary” company, including consolidated revenue thresholds and the number of employees of the company (and any other entity it controls). There are less disclosure requirements imposed on a small proprietary company, including that its financial reports do not need to be audited. Public company (Limited) Public companies involve ownership by the public and they are not restricted by the same limitations that apply to Pty Ltd companies. A public company is able to raise capital directly from the public by offering shares and other securities. Subject to certain requirements as set out in the ‘ASX Listing Rules’, public companies may also apply for listing on the Australian Securities Exchange in order to get access
Private company (Pty Ltd) This is the most common form of corporate business entity in Australia. The company is incorporated with share capital which is owned by the shareholders. The liability of the shareholders is limited to the amount which is unpaid on their shares. Private companies: ▪ must have at least one, but no more than 50, non- employee shareholders; ▪ must have at least one director residing in Australia; ▪ must have a registered office in Australia; ▪ must have a public officer, who is responsible for complying with the tax obligations of the company and dealing with the Australian tax authorities;
(a)
(b)
to capital markets. Public companies:
▪ must have at least one shareholder with no upper limits on the number of shareholders; ▪ must have at least three directors (not including alternate directors), two of whom must ordinarily reside in Australia; ▪ must have at least one secretary, who ordinarily resides in Australia; ▪ must have an auditor, and such auditor must be appointed within one month after the day that the company was registered; ▪ must have a public officer for tax purposes;
▪
may have a company secretary, but does not need to; and
▪ have fewer fundraising options available, compared to a public company. Private companies are further divided into “large proprietary” and “small proprietary” companies.
ILN Corporate Group – Establishing a Business Entity Series
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