What’s the Difference Between Pty Ltd and Ltd? (2024 Update)

Written by

Akira Singh

Company names usually end with the suffix ‘Pty Ltd’, ‘Ltd’, and ‘NL’. Although they may just look like letters, these letters determine what liability your company has.

When you register a company, you must include either Proprietary Limited, Limited or No Liability in the name. The suffix your company has will depend on what type of company it is. To misuse these titles is a very serious matter and would constitute a breach of the Corporations Act 2001 (Cth). If you breach this Act, you will face penalties from ASIC.

Only registered companies can use Pty Ltd, Ltd, and NL. This is because registered companies are considered to be a distinct legal entity, separate from their directors. This means that you will not be personally liable for any company losses or debts.

Need specialised advice regarding your company?

Contact a Lawpath consultant on 1800 529 728 to learn more about company registration, customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Conversely, you will be liable for any losses if your business is not incorporated. For example, if you run a business as a sole trader, you are the legal entity responsible for the business.

Learn about the differences in liabilities for companies below.

Pty Ltd

Pty Ltd is a term which you will often see at the end of company names. It is an abbreviation for ‘proprietary limited’. Proprietary companies are the most common form of company. This type of company may only have up to 50 shareholders, and they are private. Private companies are only required to have 1 director. They are regulated by ASIC. The transfer of shares has to be done via the consent of the shareholders, and shares cannot be offered to the public or fundraised (subject to certain specifications).

Small and large companies

The Corporations Act differentiates between small and large proprietary companies. A proprietary company is small if its yearly revenue is below $25 million, if the value of the company’s gross assets is less than $12.5 million, and if it has less than 50 employees. A proprietary company is large if its annual revenue is $25 million or more, if the value of the gross assets is more than $12.5 million, and if it has more than 50 employees. There is also a difference between Pty Ltd and Pty. Proprietary limited companies (Pty Ltd) are limited by shares. On the other hand, unlimited proprietary companies (Pty) have share capital and shareholder liability is not limited.

Ltd

Ltd simply means ‘limited’ and refers to limited liability, and includes companies limited by guarantee. Limited liability companies are public companies, which means the public has a certain amount of ownership. Public companies may generate revenue in this way, whereas private companies cannot. ASIC requires limited companies to lodge their annual accounts with them. Public companies must have at least 3 directors. Unlike proprietary companies, public companies may have as many shareholders as they like. Proprietary companies tend only to provide shares to a select number of people. ASIC and APRA regulate these companies. Finally, public companies may list their shares on the Australian Stock Exchange (ASX).

NL

Although this type of company is very specific, it is still worth noting. NL means No Liability, and it refers to a public company in the Australian mining industry. Due to the financial risk that mining involves, it is government policy to allow shareholders in these mining companies to be exempt from liability to pay calls on unpaid shares.

Conclusion

Differences in legal jargon can be confusing. This is especially the case when the differences are so important and will determine how you run your business. Hopefully this guide has given you a greater understanding of the types of companies and their requirements. If you are still unsure, contact a business lawyer or a commercial lawyer.

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

Most Popular Articles
You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions

Share:

Register for our free live webinar today!

Essential Strategic Planning for the New Financial Year

12:00pm AEDT
Thursday 11th July 2024

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

Want to open a pet shop but not sure how? This article teaches

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.