Australian Proprietary Company Incorporation
Proprietary Companies (identifiable by the suffix Pty Ltd or the words Proprietary Limited in their company name):
- provide limited liability to their shareholders, meaning that the liability falling upon shareholders in the event of a liquidation or winding-up is equivalent to any unpaid amount on their shares,
- must have at least one director who is a resident of Australia (and at least one resident company secretary if any company secretary is appointed), and
- must have a Registered Office located in Australia.
The following restrictions apply to proprietary companies:
- Proprietary Companies generally cannot engage in fundraising activities that would require the lodgement of a prospectus (i.e. seeking to raise funds from the public).
- Proprietary Companies cannot have more than 50 non-employee shareholders.
Large vs. Small Proprietary Companies
A Proprietary Company may be classified as a ‘large proprietary company’ or a ‘small proprietary company’, depending on whether they achieve two out of the following three criteria:
- the consolidated revenue for the financial year of the company and any entities it controls is $25m or more;
- the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5m or more; or
- the company and any entities it controls have 50 or more employees at the end of the financial year.
If a company does not satisfy at least two of the above criteria, it is considered a small proprietary company.
The Incorporation Process
The process involved in incorporating a proprietary company is as follows:
1. Check availability of, and choose, a company name
A register of Australian company and business names is maintained by the corporate regulator, Australian Securities and Investments Commission (ASIC). A simple name search can be undertaken on their website at http://www.asic.gov.au/.
2. Complete ASIC Form 201 Application for registration as an Australian company
The following information must be provided:
- The directors and secretaries (if any) including full name, address, date of birth and place of birth. You must have consent from all officers before incorporating the company. At least one director (and one secretary, if any are appointed) must be an Australian Resident.
- The Australian registered office
- The shareholders and share structure
- Any holding companies, if applicable
A fee (currently $457) to ASIC is payable at the time of incorporation.
A number of companies in Australia provide automated and semi-automated online company incorporation processes; in addition, most lawyers, accountants and ASIC Registered Agents will incorporate companies on their client's behalf.
Post Incorporation tasks
Once the company is incorporated, if intending to trade, there are various other tasks that need to be undertaken, such as:
- Apply for an ABN and Tax File Number with the Australian Taxation Office (ATO) www.ato.gov.au/Business/Registration/Register-your-new-business
- Nominate a Public Officer with the ATO within three months
- Maintain various statutory company registers
- Open a local bank account (not a legal requirement, but required for most businesses & to finalise registration with the ATO)
For more information on annual and other reporting requirements, please see our Registrations & Returns section.