1.What are the characteristics of a proprietary company limited by shares?
A proprietary company is defined under section 45A(1) of the Corporations Act. A proprietary company must have at least one shareholder and must not levitate its shareholding to more than 50 non-employee shareholders. Each shareholder contributes capital to the company by subscribing and paying for shares. There are no minimum capital requirements.
The liability of each shareholder is limited to any amount unpaid on shares held by that shareholder.The Corporations Act also prohibits a proprietary company from inviting public to subscribe for its shares.
A proprietary company must have at least 1 director who must be at least 18 years of age and must ordinarily reside in Australia (s201A(1) of the Corporations Act 2001). A proprietary company is not required to have a secretary but, if it does have 1 or more secretaries, at least 1 of them must ordinarily reside in Australia (s204A(1) of the Corporations Act 2001). One person may simultaneously hold the positions of company director and secretary.
A proprietary company can generally be identified by the company name ending with the words 'proprietary limited' or the abbreviation 'pty ltd'.
Further, Section 45A of the Act also distinguishes proprietary companies limited by shares as either "large proprietary" or "small proprietary". A proprietary company is classified as small only if it satisfies at least two of the following criteria:
- The consolidated revenue for the financial year of the company and the entities its controls (if any) is less than $25 million
- The value of consolidated gross assets at the end of financial year of the company and the entities its controls (if any) is less than $12.5 million
- The company and the entities its controls (if any) have fewer than 50 employees at the end of a financial year.
How a proprietary company limited by shares is formed?
Registration is affected by delivering the relevant documentation to the Australian Securities and Investment Commission. Once the documents are processed and approved, ASIC allocates a unique identifying nine-digit number, an Australian Company Number (ACN) for that company.
What are the prerequisites of the application process for registration of a proprietary company limited by shares?
- A proposed company name (if any)
- A physical registered office address within Australia
- At least one director who is ordinarily resident in Australia
- Written Consent from each director
- At least one shareholder