A proprietary company is a form of privately held company in Australia and
South Africa that is either limited or unlimited. However, unlike a public
company there are, depending on jurisdiction, restrictions on what it
can and cannot do. In Australia, a proprietary company is
defined under section 45A(1) of the Corporations Act 2001.
The Act puts certain restrictions on proprietary companies such as not
permitting them to have more than 50 members. Another important restriction
relates to fundraising. A proprietary company must not engage in fundraising
that would require a disclosure document such as a prospectus, an offer
information statement, or a profile statement to be issued). The 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 statements with the Australian Securities and
Investments Commission. Proprietary limited or unlimited company
Under Australian law, a proprietary limited company is a business structure
that has at least one shareholder with a limited number of shares. Its
counterparts include the public limited company and the Unlimited Proprietary
company with a share capital. Under the Australian Corporations Act
2001, a proprietary company must be either –
Proprietary Limited company, limited by shares, where shareholders are afforded
more protection when it comes to the level of liability they face for company
debts; or Unlimited Proprietary company with a
share capital, similar to its limited company counterpart, but where the
members' or shareholders' liability is not limited.
The proprietary limited or unlimited company must have at least one
shareholder, no more than 50 non-employee shareholders, and at least
one director who must live in Australia. A secretary can be appointed, 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 less 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 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 Singapore, a proprietary company
would be named "Relays 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".
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
See also Australian company law
UK company law References