Types of Australian Business Structures

A limited company (a Ltd Company) is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company.

Limited companies may be limited by shares or by guarantee. The former of these, a limited company limited by shares, may be further divided into public companies and private companies.

There are several types of companies that are available in Australia and depending on your situation there is a need for a specific type of ASIC Company. There are two types of proprietary companies and four types of public companies that can be registered under the Corporations Act. 

Here is a brief explanation of the different company options within Australia:

Public Companies

Public companies are permitted by law to raise money from the public by offering their shares for sale, usually listing them on the share market. The people who purchase these shares are called shareholders. You can recognise a public company because it must put the word 'Limited' or the abbreviation 'Ltd' after its name. 

Public companies must have a minimum of three directors and at least one secretary. Two of the directors and the secretary are required to be residents of Australia.

Proprietary Companies - Limited by Shares

These are usually smaller than a public company and generally are referred to as private companies or shelf companies. There can be between one and fifty shareholders, yet raising money by selling shares to the public is not permitted. Being 'Limited by Shares' literally means that the liability is limited to the value of the shares of the company.

Small businesses predominately use a private company for their trading as a means to identify and differentiate their brand from their competitors.

There is a requirement for a minimum of one director and one shareholder.  At least one of the directors must reside in Australia. According to Corporations Act 201 section 204A, a secretary is not required any longer.

Proprietary Companies - Limited by Guarantee

A company 'Limited by Guarantee' is often the preferred structure used by sports clubs who are 'non-trading' businesses. The shareholders must 'Guarantee' in writing the amount they are willing to contribute to the company should the company be unable to meet its debts. 

Special Purpose Companies - SMSF Trustee

There are times where there is a requirement for a special type of company to be used for a specific purpose. One type of special purpose company is a Self Managed Superannuation Fund Trustee company. For this to be classed as a special purpose company, a provision within the company constitution needs to be included and upon registration of the company, ASIC needs to be notified that the company's sole purpose is to act as the trustee of the SMSF

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If you have any other questions you can try our ASIC Company FAQs    

Learn about Annual Company Compliance.