There are two types of companies in Australia: a proprietary company and a public company. There are key differences between private and public companies. Notably, a proprietary company is private and does not acquire its funding from public offerings. Alternatively, a public company is funded by public offerings. Because, of this it is subject to much high regulatory supervision.
What is a shareholder?
Shareholders (also known as members) are owners of the company. They are able to contribute to company decision-making through passing resolutions at company meetings. The company is a separate legal entity and shareholders are not liable for the debts of the company.
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How many shareholders can a public company have?
A public company must have a minimum of one shareholder. A party can become a shareholder by:
- Listing as a shareholder at the time of registration;
- Agreeing in writing to becoming a shareholder of an already registered company; and
- Being a member of a company limited by guarantee at the time it converts to a share limited company.
A company must add a shareholder to the register if the individual invests in a public company. After agreeing to add a shareholder at a meeting of the directors, a company has 28 days to notify ASIC of the new member.
There is no limit to how many members a public company can have. This is different from a proprietary company which is limited to 50 non-employee shareholders.
When is a shareholders agreement necessary?
A shareholders agreement helps a company govern the relationship between its shareholders. This is particularly useful when your company is growing and adding shareholders. The shareholders agreement can protect the interests of the company. It can also provide guidance as to how to resolve any disputes that arise.
Conclusion
It’s vital that your company complies with ASIC regulations. Understanding your obligations with respect to appointing or removing members is an important part of this. A company lawyer can help you better understand the regulations and set you up for ongoing success.
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