Business Law - Business Structures - Companies

What is a company?

A company is a form of business organisation made up of members or shareholders and managed by directors. Legally it is a separate entity however on a practical level it cannot function without human assistance.

Types of companies

There are different types of companies that may be registered. These being:

• Proprietary companies limited by shares;
• Proprietary companies that are unlimited with share capital;
• Public companies limited by shares;
• Public companies limited by guarantee;
• Public companies that are unlimited with share capital;
• Public companies that are no liability companies.

The most common type of companies registered in Australia is the proprietary company limited by shares.

Who owns the company?

The shareholders own the company but do not have the charge of the day to day running or management of the company. This task is left to the company’s director or directors. Even though the shareholders do not run the company on a day to day basis, the role of the shareholder is still significant in that important decisions relating to the company will require the consent or approval of the shareholders.

Who runs the company?

The management of a company is left to the company’s director or directors depending on the number appointed when the company was formed or during the company’s lifetime. While the director may manage the company’s affairs in any way that the director sees fit, the Corporations Act does set out a director’s powers and duties and it is essential that any person wishing to be a director familiarise themselves with the relevant provisions or seek legal advice.

The company’s constitution

A company’s constitution is essentially a set of rules that the company, its shareholders and officers are bound to follow. These rules may be created to suit the particular company or if the company does not have or does not adopt its own constitution, then by default the replaceable rules in the Corporations Act will be adopted.

How we can assist

If a corporate structure is what you seek, we will be able to provide advice on the best way to set one up, the tax implications, share structure and directors’ duties.