Corporations And Companies

A corporation or a company is commonly used as a trading entity and is governed by the Corporations Act 2001 (Cth). The Australian Securities and Investment Commission (ASIC) enforces the Corporations Act.

There are different types of companies but most commonly known companies are public companies and proprietary companies.

There are suggestions that Australian courts are now changing their approach to the interpretation of statutes with the effect that discretionary trusts are not as useful in avoiding statutory obligations. In other words, in the words of the Bob Dylan song "... the times, they are a-changin"! The traditional usefulness of discretionary trusts arises from the puzzling position they hold in the law.

Public Companies.

Public companies, some of which are also listed on the Australian Stock Exchange (ASX) (see also ASX Listings),h ave more than 50 shareholders (members). A public company must have at least 3 directors, 2 of whom are normally resident in Australia and have a company secretary. Directors are appointed at a general meeting and sometimes at an earlier time to be later on confirmed at the general meeting. There are certain restrictions and qualifications to appointment as a director of a public company. The public company is generally managed by a board of directors.

>> You need only one shareholder and can have unlimited shareholders for a public company and up to 50 shareholders for a proprietary company

>> Liability of individual shareholder is limited to the amount of unpaid shares

>> As opposed to sole trader or partnership, the business risk is spread to a lot more people

>> Ownership of assets lies with the company and not individual shareholders

>> A company can issue shares to raise capital

>> A company can sue or be sued in its name rather than in the names of the shareholders

>> A company can continue in existence notwithstanding death or bankruptcy of a shareholder

Most small to medium enterprises (SMEs) operate as proprietary companies. You can have up to 50 shareholders of a proprietary company and have a sole director who is normally Australian resident. There is no requirement to have a company secretary. If there is more than one director, each director does not have to be appointed by a separate resolution. The powers of appointment and removal of directors are stated in the company's constitution and there is no statutory right of shareholders to remove them. There is also no requirement to have a company auditor and a proprietary company does not need to hold annual general meetings.

Source: http://ezinearticles.com/6278710

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