Transcript CHAPTER 2 TYPES OF COMPANIES At the end of this topic you should know: • how companies differ from other forms of association; •

CHAPTER 2
TYPES OF COMPANIES
At the end of this topic you should know:
• how companies differ from other forms of association;
• how various incorporated bodies can be formed;
• how companies can be classified; and
• the differences between public and proprietary companies.
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Introduction
There exist a number of different types of business
structures in the Australian economy.
Companies have proven to be popular because they
provide a number of advantages including taxation
considerations, limited liability and succession
planning.
Non-corporate business structures such as
partnerships, unincorporated associations, joint
ventures, trusts and sole operators have also desirable
qualities.
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Non-corporate Forms
Sole trader
Partnership
Trust
Unincorporated not-for-profit association
Unincorporated joint venture
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Non-corporate and Corporate Forms
Factors to consider when forming or managing a
business should include:
• separate business entity;
• transferability of interest;
• finance;
• size, duration and formation;
• ongoing disclosure requirements;
• taxation; and
• management and control
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Types of Artificial Entities
Types of artificial legal entities
Royal
Charter
Corporations
sole
Companies
registered under the
Corporations Act
Bodies corporate
formed by registration
under specific
legislation
Other incorporated
bodies eg, trade
unions, co-operative
societies
Corporations
created by
special legislation
Public
authorities,
instrumentalities
or agencies
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Incorporated Associations
Many not-for-profit organisations obtain the benefits
of incorporation by registering under the associations
incorporation legislation that is in force in each State
and Territory.
The members of an incorporated association are
protected from any personal liability.
The association may hold its assets and enter into
contracts in the name under which it is registered.
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Companies Registered Under the
Corporations Act
There are several different types of companies that
can be registered.
These different types of companies can be classified
according to liability of the members, public status
and size.
The main way companies are classified is according
to the liability of members.
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Companies Classified According to Liability
of Members
Companies classified according
to liability of members
Each member’s
liability for company
debts limited in some
way
Company
limited by
shares (public
or proprietary)
Company
limited
by guarantee
(public only)
Each member’s
liability for company
debts is unlimited
No liability
company
(mining public only)
Unlimited
company
(public or
proprietary)
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Companies Classified by Public Status
Companies classified according
to their public status
Public
company
Listed
Proprietary
company
Unlisted
Small
proprietary
company
Large
proprietary
company
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Public and Proprietary Companies
Proprietary
Public
1 shareholder
max. 50
1 director
(1 resident)
1 shareholder
no max.
3 directors
(2 resident)
Finance
can’t get funds from
the public
Listing
can’t be listed
can get funds from the
public (with disclosure
document)
can be listed or unlisted
Shareholders
Directors
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Proprietary Companies Classified According
to Size
Proprietary companies are further classified as
“small” or “large” by applying certain objective tests of
size and value to the business.
The definition of “small” or “large” are contained in
s 45A(2)-(6): see [2.280].
Small proprietary companies generally do not have to
prepare financial reports or have them audited”:
s 292(1) and (2), and ASIC Regulatory Guide 115.
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Proprietary Companies Classified According
to Size
ASIC does have power to relieve a proprietary
company from the audit requirements imposed by the
Corporations Act in the circumstances set out in
s 342(1).
ASIC has issued a Regulatory Guide which sets out
the conditions under which it will relieve large
proprietary companies from the audit requirements:
Regulatory Guide RG 115.
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.
Change of Status
After a company has been registered it is possible, in
most instances, for it to convert to another type of
company: see [2.330].
The procedures set out in ss 163-164 must be
followed.
The requirements vary depending on the nature of the
change, but include a special resolution of members.
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PowerPoint slides to accompany Corporations Law: In Principle, 8 th Edition. Ciro & Symes.