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 at firstname.lastname@example.org.