Company differences

What is the difference between …..

Sometimes when looking at a company and its structure you need to know “What is the difference between….”.  Here are the answers to some FAQ’s.

A Member and a Shareholder

If a company has share capital, there is no difference between a member of a company and a shareholder.

If a company does not have share capital, then there are no shareholders, only members.

Articles of Association and a Company Constitution

A company incorporated before 1 July 1998 had to have both a Memorandum and Articles of Association.  A company incorporated since 1998 has to have a Constitution and/or use the replaceable rules in the Corporations Act 2001.  A company with just one member must have a Constitution.

For a company that was incorporated before 1 July 1998 and still has a Memorandum of Association and Articles of Association, the good news is that these are still valid.

A Public Company and a Proprietary Company

The essential differences are set out below.

The Corporations Act 2001 provides that a proprietary company (usually designated as a Pty Ltd or Pty Limited) has the following restrictions: –

  1. It must have less than 50 members;
  2. It must have at least one member;
  3. Cannot offer shares to the public – hence why they are sometimes referred to as private companies;
  4. Any transfer of shares must be consented to; and
  5. Can operate with just one director.

A Public company (usually designated as Ltd or Limited): –

  1. Can have any number of members;
  2. Must have at least 5 members;
  3. Can offer shares to members of the public (subject to compliance with the Corporations Act 2001);
  4. The transfer of shares does not have to be consented to and shares may be listed on a stock exchange; and
  5. Must have 3 directors

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