A private company is a company that is registered as, or converts to, a proprietary company under the Corporations Act 2001 (C’th). Directors of proprietary companies have legal duties and responsibilities under the Corporations Act.
Under the Corporations Act, a proprietary company must:
- be limited by shares or be an unlimited company with a share capital;
- have no more than 50 non-employee shareholders;
- not do anything that would require disclosure to investors under Chapter 6D of the Act; and
- have at least 1 director.
The terms “company limited by shares” and “unlimited company” are defined in the Corporations Act – Section 9. Unlike public companies, proprietary companies cannot sell shares to the public.
Most small businesses registered as companies in Australia are proprietary companies limited by shares. Private companies are regulated by the Australian Securities and Investments Commission (ASIC).
Small Proprietary Company
In summary, a small proprietary company is one where 2 out of the following 3 criteria are met:
- consolidated revenue for the financial year is less than $25 million;
- value of consolidated gross assets at the end of the financial year is less than $12.5 million;
- the company has less than 50 employees.
Large Proprietary Company
In summary, a large proprietary company is one where 2 out of the following 3 criteria are met:
- consolidated revenue for the financial year is $25 million or more;
- value of consolidated gross assets at the end of the financial year is $12.5 million or more;
- the company has 50 or more employees.
To obtain the full text of the legal definitions of these company types please refer to theCorporations Act.
Unlisted public companies
Unlisted public companies differ from proprietary companies in that they can offer shares to the public. However, in contrast to a listed public company, their shares will not be included on the official list of a securities exchange.
This category includes:
- public companies limited by shares (not listed);
- unlimited public companies; and
- unlisted no liability companies (mining companies).
All unlisted public companies registered under the Corporations Act must have at least 3 directors, 2 of whom must be Australian residents.
Public companies limited by guarantee are referred to under Not-For-Profit organisations below.
Public companies limited by shares (not listed)
Shares in these companies can be offered to the public, but the company is not listed on a prescribed financial market (eg. a securities exchange). They are formed on the principle that the liability of members is limited to the amount (if any) unpaid on shares held.
Unlike public companies limited by guarantee, companies registered this way are likely to operate to generate a commercial profit.
Unlimited public companies
There is no limit to the liability of members of unlimited public companies.
The benefit of registering a company in this way is that it is possible to reduce share capital in any way (Section 258A of the Corporations Act).
No liability companies (not listed)
Under the Corporations Act (the Act), a company may be registered as a no liability company only if:
- the company has a share capital; and
- the company's constitution states that its sole objects are mining purposes; and
- the company has no contractual right under its constitution to recover calls made on its shares from a shareholder who fails to pay them.
See further section 112 of the Corporations Act. Section 9 of the Act defines mining purposes and minerals.
Listed public companies
These companies are included in the official list of a prescribed financial market. For example, their securities are listed on a securities exchange (a market place for investors e.g. ASX), where their shares can be bought and sold by members of the public.
All listed public companies registered under the Corporations Act must have at least 3 directors, 2 of whom must be Australian residents.
The primary purpose of not-for-profit (NFP) organisations is to pursue a goal or special interest other than commercial profit for its members. The purpose, or primary objective, of an NFP may be charitable, social, educational, professional or religious. Examples include schools, churches, sporting clubs and membership organisations for industry professions.
Any surplus generated by an NFP must be put towards advancing the purpose for which the organisation was established; not distributed to members.
NFPs are often established as public companies limited by guarantee or incorporated associations (as described below).
Public companies limited by guarantee
This is a common structure for not-for-profit or charitable organisations that reinvest any surplus (profit) to serve its primary purpose.
These companies are formed on the principle that the liability of members is limited to the amount they agree to contribute in the event the company is wound up. This is typically a nominal amount and is prescribed in a company’s constitution.
As public companies limited by guarantee are registered under the Corporations Act, directors of not-for-profits (which have this structure) generally have the same legal duties, responsibilities and liabilities as directors of commercial entities that are public companies registered under the Act.
Incorporated associations are formed under, and must comply with, the relevant legislation for their state or territory. Unlike public companies limited by guarantee, these organisations are not administered by the Australian Securities and Investments Commission (ASIC).
For more information on not-for-profit organisations we refer to ASIC: Registering not-for-profit or charitable organisations.
Australia has 3 tiers of government (Federal, State & Territory, and Local) with differing governance arrangements.
Federal and State & Territory Governments generally have 2 types of organisations – government departments which are normally funded through budget appropriations, and Corporations/Business Enterprises which are more commercial in their operations and funding.
A commonwealth company is a Corporations Act company that the Commonwealth (the legal entity of Australia) controls. For more information, see the Commonwealth Authorities and Companies Act 1997, Section 34 (CAC Act).
Chart of 87 bodies operating under the CAC Act (pg 2).
For more information, see “Governance Arrangements for Australian Government Bodies”.
Federal Government departments
Federal Government departments form the administrative arm of the Australian Government’s executive arm. Together, government departments make up the public service.
The Financial Management and Accountability Act 1997 (FMA Act) provides the framework for the management of public money and public property by the Executive arm of the Commonwealth.
FMA Act Agencies, as defined under section 5 of the FMA Act, include:
- Departments of State
- Departments of the Parliament
- Agencies prescribed by the FMA Regulations
Chart of 105 agencies operating under the FMA Act.
For more information, see “Governance Arrangements for Australian Government Bodies”.
State & Territory Governments
Links to directories of state/territory owned-corporations and agencies are provided below.
ACT: Departments, public authorities and territory owned corporations
NSW: NSW Government Directory - This page provides a link to NSW Government’s Super Departments and a complete list of approximately 220 agencies.
Northern Territory: A-Z Government - The Northern Territory Government is made up of 12 principal agencies along with a range of other agencies, statutory bodies and government-owned corporations.
Queensland: Government Departments - Government services are provided by 13 departments. Government-owned corporations and other government bodies, including boards.
SA: Government of South Australia - This page provides links to State departments and other state bodies, including corporations.
Tasmania: Tasmanian Government Organisations - This page provides links to Government departments and other bodies, including Government Business Enterprises.
Victoria: Victorian Government Departments and Agencies. Victorian Statutory Bodies and State-owned enterprises.
WA: Government of Western Australian Departments and Agencies.
Definition of Local Government (australia.gov.au).
The abbreviations set out in the table below may be used instead of words required by the Corporations Act to be part of a company’s name:
|| Co or Coy
|Australian Company Number
Australian Business Number
Corporations Act 2001
How to register a company – ASIC
Financial Framework of the Australian Government – Department of Finance and Deregulation