Proprietary company
Encyclopedia
A proprietary company is a form of corporation
in Australia and South Africa that is either limited or unlimited. However, unlike a public company there are, depending on jurisdiction
, restrictions on what they can and cannot do.
In Australia, a proprietary company is defined under section 45A(1) of the Corporations Act.
The Act puts certain restrictions on proprietary companies such as not permitting them to have more than 50 members (shareholder
s). Another important restriction relates to fundraising
. A proprietary company must not engage in fundraising that would require a disclosure document such as a prospectus
, offer information statement, or profile statement to be issued (section 113(3)). The Corporations Act states in which circumstances a company must issue a prospectus when attempting to raise funds. This means that a Proprietary company must not offer its shares to the public.
Section 45A of the Act also distinguishes proprietary companies as either "large proprietary" or "small proprietary". The differences here relate to issues such as operating revenue
, consolidated gross assets, and the number of employed persons.
Large proprietary companies are required to appoint an auditor and lodge appropriate financial statement
s with the Australian Securities and Investments Commission
(ASIC).
, abbreviated as 'Pty Ltd' is a business structure that has at least one shareholder
with a limited number of shares. Its counterparts include the public Limited company (Ltd.) and the Unlimited Proprietary company (Pty.) with a share capital.
Under the governing Australian Corporations Act 2001
(Cth), a proprietary company must either be:
The proprietary limited or unlimited company must have at least one shareholder and must have no more than 50 non-employee shareholders and at least one director who must live in Australia. A secretary can be appointed (Sect. 204A), that must be at least 18 years of age. One person may simultaneously hold the positions of company director and secretary.
Proprietary limited companies are also classified as "large" or "small". A proprietary company is classified as small only if it meets at least two of the following criteria:
Most large proprietary companies have to lodge audited accounts. Small proprietary companies only have to prepare audited financial statements if ordered to do so by the Australian Securities and Investments Commission
(ASIC) or members holding five percent of voting shares and, in some cases, if controlled by a foreign company.
, a proprietary company would be named "Relays (Private) Limited" abbreviated to "Relays Pte Ltd". In the United Kingdom, a proprietary company is assumed when the name ends in "Limited", as in Relays Limited. A public limited company
is designated by the abbreviation "plc" as in "Relays plc". This was done when the distinction was introduced to minimise the amount of name changing. Thus the United Kingdom usage of Limited is the reverse of that of Australia.
Australian Company Number
(ACN
)
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
in Australia and South Africa that is either limited or unlimited. However, unlike a public company there are, depending on jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
, restrictions on what they can and cannot do.
In Australia, a proprietary company is defined under section 45A(1) of the Corporations Act.
The Act puts certain restrictions on proprietary companies such as not permitting them to have more than 50 members (shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s). Another important restriction relates to fundraising
Fundraising
Fundraising or fund raising is the process of soliciting and gathering voluntary contributions as money or other resources, by requesting donations from individuals, businesses, charitable foundations, or governmental agencies...
. A proprietary company must not engage in fundraising that would require a disclosure document such as a prospectus
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
, offer information statement, or profile statement to be issued (section 113(3)). The Corporations Act states in which circumstances a company must issue a prospectus when attempting to raise funds. This means that a Proprietary company must not offer its shares to the public.
Section 45A of the Act also distinguishes proprietary companies as either "large proprietary" or "small proprietary". The differences here relate to issues such as operating revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
, consolidated gross assets, and the number of employed persons.
Large proprietary companies are required to appoint an auditor and lodge appropriate financial statement
Financial statement
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
s with the Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
(ASIC).
Proprietary limited or unlimited company
Under Australian law, a proprietary limited companyCompany
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
, abbreviated as 'Pty Ltd' is a business structure that has at least one shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
with a limited number of shares. Its counterparts include the public Limited company (Ltd.) and the Unlimited Proprietary company (Pty.) with a share capital.
Under the governing Australian Corporations Act 2001
Corporations Act 2001
The Corporations Act 2001 , sometimes referred to just as the Corporations Act , is an act of the Commonwealth of Australia that sets out the laws dealing with business entities in Australia at federal and interstate level...
(Cth), a proprietary company must either be:
- Proprietary Limited (Pty Ltd) company, limited by sharesPrivate company limited by sharesA private company limited by shares, usually called a private limited company , is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland...
, where shareholders are afforded more protection when it comes to the level of liabilityLimited liabilityLimited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
that they face for company debts; or - Unlimited ProprietaryUnlimited CompanyAn unlimited company or private unlimited company is a hybrid company incorporated either with or without a share capital but where the liability of the members or shareholders is not limited - that is, its members or shareholders have a joint, several and unlimited obligation to meet any...
(Pty) company with a share capital, similar to its limited company (Ltd., or Pty. Ltd.) counterpart, but where the members or shareholders liability is not limited.
The proprietary limited or unlimited company must have at least one shareholder and must have no more than 50 non-employee shareholders and at least one director who must live in Australia. A secretary can be appointed (Sect. 204A), that must be at least 18 years of age. One person may simultaneously hold the positions of company director and secretary.
Proprietary limited companies are also classified as "large" or "small". A proprietary company is classified as small only if it meets at least two of the following criteria:
- It has assets of less than $12.5 million at the end of a financial year.
- It has fewer than 50 employees at the end of a financial year.
- It has a gross operating revenue of less than $25 million for the financial year.
Most large proprietary companies have to lodge audited accounts. Small proprietary companies only have to prepare audited financial statements if ordered to do so by the Australian Securities and Investments Commission
Australian Securities and Investments Commission
The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator...
(ASIC) or members holding five percent of voting shares and, in some cases, if controlled by a foreign company.
Company names
Proprietary companies have the word "Proprietary" in their name, thus Relays Proprietary Limited, abbreviated to Relays Pty Ltd or Relays P/L.Other countries
In India, a proprietary company would be named "Relays Private Limited", abbreviated to "Relays Pvt. Ltd." In SingaporeSingapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, a proprietary company would be named "Relays (Private) Limited" abbreviated to "Relays Pte Ltd". In the United Kingdom, a proprietary company is assumed when the name ends in "Limited", as in Relays Limited. A public limited company
Public limited company
A public limited company is a limited liability company that sells shares to the public in United Kingdom company law, in the Republic of Ireland and Commonwealth jurisdictions....
is designated by the abbreviation "plc" as in "Relays plc". This was done when the distinction was introduced to minimise the amount of name changing. Thus the United Kingdom usage of Limited is the reverse of that of Australia.
Company number
To help identify companies more uniquely and concisely, many countries have a company number which does not change if the company changes its name.Australian Company Number
Australian Company Number
An Australian Company Number is a unique nine-digit number issued by the Australian Securities and Investments Commission to every company registered under the Commonwealth Corporations Act 2001 as an identifier. The number is usually printed in three groups of three digits. It must be quoted...
(ACN
ACN
ACN is a three-letter acronym that may refer to:* Accenture * Achnasheen railway station , a United Kingdom railway station* Acrylonitrile* Acetonitrile...
)