Shareholders vs. directors
In simple terms, shareholders own the company, while directors manage it. You can read more about the role of directors here.
Requirements for a shareholder
At least one shareholder: A Pty Ltd company must have at least one shareholder.
Minimum shareholding: Each shareholder must hold at least one share, which can be valued at as little as one cent.
Shareholder duties
Key duties of a shareholder include:
Voting on major decisions, such as appointing directors or approving significant transactions
Compliance, ensuring the company meets legal and regulatory requirements
Meeting participation, attending annual general meetings (AGMs) and other important meetings
Shareholders will also be required to sign formation documents, including the Resolution of Members and Application for Shares.
Classes of shares
The class (or "type") of shares a shareholder owns determines their rights within the company.
In most cases, new companies are set up with ORD (Ordinary) shares as standard, unless you've had specific advice from a lawyer or accountant.
You can read more about the different share classes and what they mean in the article here.
Importance of a shareholder agreement
A shareholder agreement is a crucial document, especially if you have multiple shareholders or are considering using different share classes.
This document outlines the rights and obligations of shareholders, helping to prevent disputes by setting clear rules for decision making and conflict resolution.
You can find this template in the Lawpath library here.
FAQs
What if I am the only person in the business?
If you're the sole owner of the business, you'll be listed as both a shareholder and director, holding 100% of the shares.
Can I change shareholders?
Yes. Shareholders can transfer their shares to others, subject to the company's Constitution and Shareholder Agreement. You can add or remove shareholders at any time after registration. Our Business Services team can help here.
What if a company is a shareholder?
Corporate shareholders operate like individual shareholders, but with the decision making and representation structure of a company.
Corporate shareholders can also be added as part of a Corporate Trustee structure. This is a popular option for protecting company assets and adding extra privacy and risk protection. If you'd like to find out more, check out our Assisted Trust set up page.
Does the shareholder have to be an Australian resident?
No. Unlike a director, there's no residency requirement for shareholders. However, registering a company ABN can be more complex if there are no Australian shareholders in the company, and may take the ATO up to 28 additional days to process.
Can a shareholder be on a visa?
Whether you can run a business or company while on a visa depends on the specific visa and your working rights in Australia.
Some visas limit the number of working hours, and others carry stricter rules. We'd suggest checking the terms of your visa with the Department of Home Affairs, or seeking advice from a qualified immigration lawyer before moving forward.
Can I keep my shareholder information private?
All shareholders are listed on the ASIC register unless you have an Oppression Order. This information is public and can be downloaded with the Company Information directly from ASIC by any member of the public.
Ready to start or resume your new company registration? Get into the application here