All Australian companies are issued with an Australian Company Number (ACN) upon registration with ASIC. A company does not have to have a name, but if it does have a name it must be unique and is subject to the approval of ASIC.
There are five different classes of company:
- limited by shares;
- limited by guarantee;
- limited by both shares and guarantee;
- no liability companies.
The most common type of company is limited by shares, which includes most commercial businesses. There are over 1.8 million companies limited by shares in Australia, and these companies can either be proprietary companies or public companies.
What is a proprietary company?
Proprietary companies are distinguishable by the “Pty Ltd” suffix and make up the largest proportion of companies in Australia. Proprietary companies can have a maximum of 50 non-employee shareholders and are not permitted to raise capital from the public.
A proprietary company is small if it meets two of the three of the following criteria:
- consolidated gross operating revenue less than $25 million
- consolidated gross assets are less than $12.5 million
- it has fewer than 50 equivalent full-time employees
Small proprietary companies have less disclosure requirements than a large proprietary companies. Large proprietary companies have to lodge audited financial statements with ASIC, whereas small proprietary companies are not required to do so.
What is a public company?
A public company is defined as a company that is not a proprietary company. They must have a minimum of one shareholder, but there is no maximum. Public companies can raise capital from the public and may also list on the Australian Stock Exchange. Public companies are required to file audited financial statements with ASIC every year.