I THE PROCEDURE BY WHICH A COMPANY CAN BE FORMED
The formation of a company, known as incorporation, is achieved ‘by a process of registration controlled by the Australian Securities and Investments Commission.’
A Pre-registration Requirements
The pre-registration requirements are:
•The selection of the classification and type of company
•The selection of a company name, this is optional
•Completion of the application of registration using form 201 •Lodgement of the application with ASIC
1 Classification and Type of Company
(a) Company Classifications
There are two company classifications, proprietary and public. Most Australian companies are proprietary limited companies because this classification and type suits the needs of most businesses.
(i) Reasons to Choose a Proprietary Company
A proprietary company by comparison to a public company has simpler and therefore lower cost reporting obligations, is limited to 50 non employee shareholders’, ‘and between 1 to 50 members’ , a public company can have more.
A proprietary company requires a minimum of one director a public company requires a minimum of three directors. The director or directors of proprietary company must ordinarily reside in Australia and be 18 years of age or older.
A public company can be listed on the stock exchange and raise funds directly from the public by offering shares or debentures for sale’ a proprietary company cannot, however a proprietary company can offer shares to existing shareholders or employees.
(b) Company Types
There are two types of proprietary companies, companies limited by shares and companies unlimited with share capital.
(i) Reason to Choose a Company Limited by Shares
In the event that a company limited by shares does not have sufficient assets to meet its debts, each member is only liable for the amount, if any, that remains unpaid on their shares , ‘[L]imited liability means that members of a company are not personally liable for the full extent of their company’s debts.’ This limitation of personal liability is the great advantage of this type of company.
(ii) Reason Not to Choose a Company Unlimited with Share Capital An ‘unlimited company means a company whose members have no limit placed on their liability’ for their company’s debts. Unlimited companies are rarely used.
2 Company Names
A company name is optional; the company’s ACN can be used instead. The name ‘Sai Kung’ has been chosen and so an application for reservation of the name, form 410, must be lodged with ASIC prior to the application to register the company. See attachment 1.
‘A limited proprietary company must have the words “Proprietary Limited” [or Pty Ltd] at the end of its name.’
B Application for Registration
1 Application Form
To register the company, ASIC form 201 must be completed and lodged with ASIC. See attachment 2.
2 Additional Information Required for Registration
In addition to the classification, type and proposed name of the company the following information must be provided: •‘the name and address of each person who consents to become a member’ • ‘the present given and family name, all former given and family names and the date and place of birth of each person who consents in writing to become a director •‘the present given and family name, all former given and family names and the date and place of birth of each person who consents in writing to become a company secretary;’ A proprietary company is not required to have a secretary •‘the address of the company’s registered office;’ •‘the address of the company’s proposed principal place of business (if it is not the address of the proposed registered office);’ •‘the number of shares each member agrees in writing to take up;’ The price of each share, whether the share will be fully paid on registration, if not fully...