If you wish to operate a business enterprise in Australia, you can do so as an individual, a partnership, joint venture, trust or as a company. The choice to form a company doesn't limit you to one structure.
If you are registering a new company with the Australian Securities and Investments Commission (ASIC) -- as opposed to purchasing an existing shelf company -- you can choose from one of the four company types allowed by the Corporations Act 2001.
Your choices are:
- A company limited by shares
- A company limited by guarantee
- A 'no liability' company (for mining) or
- A company with unlimited liability
The company structure you select will generally be dictated by the nature and size of enterprise you wish to undertake, governance and management and taxation implications.
The most common choice is a company limited by shares. It can either be a proprietary or pivate company or a public company. If you set up a private/proprietary company, it can have no more than 50 non-employee shareholders. It must have at least one director and must not do anything that would require 'public disclosure' under Chapter 6D of the Corporations Act.
Proprietary companies will, in turn, be classified as either small or large. A small proprietary company must have less than $25m consolidated revenue for the financial year; gross assets at the end of the financial year of less than $12.5m and less than 50 employees.
Public companies may be listed or unlisted and differ from proprietary companies in that they are permitted to offer their shares to the public, A listed public company will have those shares listed (and, therefore able to trade) on the official stock exchange.
An 'unlimited' public company means that there is no limit to the liability of its shareholders. The liability of the shareholders in a limited public company is, by contrast, limited to the unpaid value of their shares.
A 'no liability' company is not listed and its constitution states that its sole activities are in mining. The 'no liability' company's constitution also gives it no contractual means of retrieving call options from shareholders.
A company limited by guarantee is a popular structure for a not-for-profit or charitable organisation. Such organisations usually reinvest any profits back into the activities that relate to their core purpose. The liability of their members is usually limited to a nominal amount that they agree to pay if the company is wound up. That amount is usually stipulated in the company's constitution.