Proprietary Limited Company

A private limited company, also known as a proprietary limited company (Pty Ltd), is a separate legal entity from its owners, offering limited liability protection to shareholders. This means that shareholders’ personal assets are generally protected from the company’s debts and liabilities. In contrast, sole traders and partnerships do not have this separation, resulting in unlimited personal liability for the business debts.

To register a limited company in Australia, you need:

A private limited company in Australia can have a minimum of one shareholder and a maximum of 50 shareholders. This limitation distinguishes it from a public company, which can have an unlimited number of shareholders and can offer its shares to the general public.

Directors of Australian companies have various responsibilities and duties, including:

1. Acting in good faith and in the best interests of the company.

2. Exercising care, diligence, and skill in their role.

3. Avoiding conflicts of interest.

4. Complying with legal and regulatory requirements.

Directors can be held personally liable for breaches of their duties, including financial penalties, compensation orders, and disqualification from managing companies.

The management and administration of a limited company are typically structured as follows:

Responsible for the overall management and strategic direction of the company.

Owners of the company who elect directors, approve major decisions, and receive dividends.

Responsible for administrative tasks and ensuring compliance with regulatory requirements.

Annual compliance requirements for a private limited company in Australia may include:

1. Lodgment of annual financial statements and reports with ASIC.

2. Holding annual general meetings (AGMs) if required.

3. Updating company details with ASIC, including changes to directors, shareholders, and registered office address.

4. Payment of annual fees and charges to ASIC.

Private limited companies in Australia are subject to corporate income tax on their taxable income at the applicable company tax rate. Additionally, shareholders may be subject to personal income tax on any dividends received from the company. The company is also required to comply with Goods and Services Tax (GST) and Pay As You Go (PAYG) withholding obligations.

A private limited company in Australia can be dissolved or wound up voluntarily or involuntarily. Voluntary winding up may occur through members’ voluntary liquidation or creditors’ voluntary liquidation, where the company’s assets are realized and distributed to creditors and shareholders according to statutory priorities. Involuntary winding up may occur through court orders or ASIC intervention due to insolvency or breaches of the Corporations Act.