Company Structure

admin · #1 (**permalink**) 16th February 2010, 02:24 PM

Companies

A company is a legal entity separate from its shareholders, who are the owners. The Corporations Law, administered by the Australian Securities and Investments Commission (ASIC), provides companies with separate legal personalities upon registration, which affords them legal status to enter into contracts, etc. A company‘s operations are governed by its constitution to the extent that the rules are not inconsistent with the Corporations Law.

The Corporations Law provides for different types of company, such as:
· Companies limited by shares, the most popular type.
· Companies limited by guarantee, where the members guarantee to pay up to a stated amount in the event of winding up.
· No liability companies, in which the shareholders have no liability.
· Unlimited companies, where the liability of members is unlimited in the event of winding up.

Limited companies - Limited companies protect shareholders by limiting their liabilities to the extent of any amounts remaining unpaid on their shares.

Limited companies are either ‘public’ (whether listed on the stock exchange or not) or ‘proprietary’ (private limited liability company).

All companies must have at least one shareholder. Proprietary companies can have up to 50 shareholders, while the numbers of shareholders in public companies are not restricted.
Public companies must have at least three directors, two of whom must be ordinarily resident in Australia, and proprietary companies must have at least one director ordinarily resident in Australia.

Public companies are also required to appoint a company secretary who must be ordinarily resident in Australia. The company secretary may also be a director. A listed public company is subject to mandatory listing requirements imposed by the Australian Stock Exchange (ASX).

Common to both forms of company are the following conditions:

Directors must be natural persons.
A public officer must be appointed to satisfy taxation reporting requirements (often fulfilled by the company secretary).
A company must apply to ASIC to be registered and be given an Australian Companies Number (ACN).
A company must have a registered office in Australia with minimum prescribed office hours.

Directors of limited or proprietary companies do not have to beneficially own shares.

Financial reporting requirements differ depending on the type and size of the company. There are also regulations on keeping statutory records, making annual filings, etc.

Directors and other officers of a company are subject to duties imposed by the Corporations Law or other legislation. A breach of these duties may result in civil or criminal penalties.

Taxation of companies - A company pays income tax on its taxable income. The tax rate is presently a flat 30 per cent with no tax-free threshold.

Branch of a foreign company - Foreign companies can operate branches in Australia, which are considered to be extensions of the foreign company.

To operate an Australian branch, a foreign company must register with ASIC. Registered foreign companies are provided with an Australian Registered Body Number (ARBN). Branch profits are subject to the normal rate of corporate tax. There is no separate branch profits tax.

Please note the information contained on this website is general in nature and should not be relied upon as tax advice. If you have a question please contact Sean Urquhart on 02 8264 0755.

http://www.accountant.com.au/accountants-nsw/

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