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: –
- It must have less than 50 members;
- It must have at least one member;
- Cannot offer shares to the public – hence why they are sometimes referred to as private companies;
- Any transfer of shares must be consented to; and
- Can operate with just one director.
A Public company (usually designated as Ltd or Limited): –
- Can have any number of members;
- Must have at least 5 members;
- Can offer shares to members of the public (subject to compliance with the Corporations Act 2001);
- The transfer of shares does not have to be consented to and shares may be listed on a stock exchange; and
- Must have 3 directors
If you have any specific questions, email us .
This article is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader’s specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact us.