A proprietary company is a legal entity that is separate from you and any others who own and manage the business.
On this page:
Overview
Advantages and disadvantages
Registering a company
Responsibilities of company directors
Seek advice
Overview
A company can have assets and liabilities and make profits and losses quite separately from its shareholders.
It can also acquire and sell property, take legal action and sign documents.
A company must have at least one shareholder and it may have more than one director. Shareholders may also be directors and company secretaries. Residency laws apply, with at least one director normally resident in Australia.
A company can be formed by one or more people, who must be over the age of 18.
People who are undischarged bankrupts or have been convicted of company-related offences are barred from forming a company. People who have committed any breaches of corporate law should see a solicitor before considering whether to form or enter a new company. There are serious penalties for ignoring these rules.
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Advantages and disadvantages
| Advantages | Disadvantages |
- limited liability for the company’s debts (can be destroyed by creditors seeking personal guarantees from directors)
- ease of transferring ownership by selling shares
- shareholders can be employed by the company
- favourable tax rates
- access to a wider capital and skills base
|
- more expensive to establish and maintain
- need to comply with Australian Securities and Investment Commission (ASIC) requirements
- financial affairs open to public scrutiny
- prosecution and fines for failing to comply with Corporations Law
- directors' activities scrutinised by ASIC
- costly to wind up
|
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Registering a company
Applications to register an Australian company can be made through a number of business service providers. To find these providers, search business listings for 'shelf company services' or 'Australian company registration'. These providers can also offer full company secretarial services including registers, consents and share certificates.
There is a step-by-step guide for
how to register a company on the Australian Securities and Investments Commission (ASIC) website.
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Responsibilities of company directors
Directors' responsibilities are set down in law and it is common for company rules to give set duties to specific individuals.
Directors must ensure all actions of the company are properly recorded. They must also hold an annual general meeting that includes the shareholders and lodge various forms with ASIC.
The directors may also manage day-to-day operations of the business.
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Seek advice
Consult an accountant or lawyer if you are considering formation of a company to help you determine whether it is the appropriate structure for your business.
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More information
On this site
Sole trader
Partnership
Trust
Guidance and support
Other websites
www.cpaaustralia.com.au
www.charteredaccountants.com.au
www.companydirectors.com.au
www.asic.gov.au
Downloads
Proprietary companies (PDF 244KB) - BizFacts
Choosing the right business structure for you (PDF 234KB) - BizFacts