A company is a legal entity that is separate and distinct from its owners/shareholders.
Company registration is quick and easy with Lawpath. It provides your business with greater legal protection as well as enhanced recognition in the market.
Separate entity
A company is a separate legal entity. It's a distinct person in the eyes of the law, separate from those who formed it. As a result, it can incur debt, sue, and be sued. The rights and duties of a company are separate from the rights and duties of its directors and shareholders.
This means shareholder liability is limited, since the company itself carries the debt. The debts of the business won't touch personal assets. This is known as the corporate veil. In some cases, such as fraud and phoenixing, the corporate veil can be "pierced," and an individual may be held personally responsible for the company's debts and actions.
There are also tax benefits to operating as a company compared to other business structures, especially as business income rises.
Types of Company
Limited by shares: has shareholders whose liability is limited to the value of their shares. Can be a private or public company.
Limited by guarantee: has members rather than shareholders, no share capital, and is mainly used for not for profit organisations.
Private (Pty Ltd) vs. Public (Ltd) companies
Small business owners often use a structure known as a private company denoted by proprietary limited ‘Pty Ltd’. ASIC reports that 98.87% of all registered companies are proprietary including small or large companies. These shares have limited liability and are not available to the public. Private companies have a minimum of one shareholder and a maximum of fifty.
Public companies often have ‘Ltd’ after their name. They have a minimum of one shareholder and no maximum. A public company must have at least three directors and at least one secretary. Public companies raise capital by offering shares on the ASX. The owners of public companies have unlimited liability.
For more information on running a corporation and the legal requirements visit the ASIC webpage.
Get Started!
With Lawpath you can register your company with our 100% online and easy-to-use company registration service.
Schedule a free call here with a Companies Registration expert about your business and discuss what is needed to start a Pty Ltd company with Lawpath- Company Expert Consultant
Find out more about different business structures in our article here: "Which Business Structure Is Right for You"