6 Types of Companies
Content
What's the difference of Co, Pty, Ltd, Inc, and so on? Best Answer: Ltd is a company limited by shares, but older companies used used this abbreviation for all limited companies, such as Limited Liability Partnerships(LLP), Limited Liability Companies(LLC), Limited Partnerships (LP). Co. is simply a company which can be any business , in fact, all of the thins you are as!in about can be called companies. Corp. is a company owned by many people or roups. Pty. means indicates that a party, or proprietor, e"ercises private ownership, control or use over an item of property, usually to the e"clusion of other parties. #nc. is $uite comple" and can be $uite similar to a corporation or can be a non%profit &here are also 'L means not limited and some common forein abbreviations are A (A!tienesellschaft % erman: stoc! corporation), mb* (esellschaft mit beschr+n!ter *aftun % erman: Company with limited liability), .A. (ociedade An-nima, Portuuese: anonymous society toc! Corporation), .r.l (societ/ a responsabilit/ limitata) % #talian: limited liability Company, .p. A. (ociet/ per A0ioni) % #talian: hares%based Company, and PLC after a 12 or #rish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. (&he e$uivalent term in the 1nited tates is Public company)
Six different types of public and a nd proprietary companies James
Following on from my blog on company characteristics, I thought I would write a quick blog on the different types of companies that are common today.
Companies are classified accordin accor din to liability, si0e and where they are listed. 3e will discuss the first two and the resultin 4 common types of companies we arrive at. Classification according to member liability 1 – Companies limited by shares (!nown as 5limited liability6 companies)
&ypically, members are usually shareholders and their liability is limited to the nominal (nominal &ypically, capital is defined as the capital with which the company was incorporated) value of their shares plus any unpaid amount on their shares. As an e"ample, say you buy B*P shares at 789 for 899 s hares, then your liability is limited so that if B*P were to be sued, it is limited to the 789 paid. &his is sometimes conducted differently when you don6t fully pay for shares when the company floats. #f 7 was paid and 7 was then owed on the shares, then the remainin amount must be contributed should it be called upon. As we probably !now by now, the sinificance is that shareholders are not liable for the full amount. &his is !nown as the share capital method of corporate finance. Another method is by debt ; oin to a ban! and as!in for money to be lent. &his is a different contractual areement.
2 – Companies limited by guarantee (small and charitable oranisations)
&he difference with these companies is that members can place a uarantee on the company which may only be enforced on the windin up of the company and is not an asset of the company which may be chared durin its life. &hese companies have no share capital unli!e companies limited by shares. <ften non%profit companies and charities use this method. – !nlimited liability companies (partnerships)
&he unlimited liability company was the oriinal form of reistered company under the 8=>> 12 Act. #t is defined in Australia in the corporations act as a company whose members have no limit placed on their individual liability to contribute to the debts of the company. &he ole advantae is that this company is e"empt from the prohibition on reduction of capital (s?=A) which means money can be more freely ta!en out of the company6s capital base. &he clear disadvantae is that members miht not be aware of their unlimited personal liability when @oinin. &oday the unlimited liability company is used mainly by professional oranisations carried on in a partnership li!e many Leal and Accountin firms. " – #o liability companies ("clusively minin and resource companies)
#n Australia, companies may only be reistered as no liability where a) the company has share capital, b) the company6s constitution states that its sole ob@ects are minin purposes and, c) the company has no contractual riht under its constitution to recover calls made on its shares from a shareholder who fails to pay them s88?(?). s88?(?) of Corporations Act says constitution must state that the sole ob@ect is minin purposes. <riinally because minin is seen as particularly ris!y business and people were reluctant to invest. hares are part paid with the option of payin the remainder later. Classification according to si$e
&he other !ey way to classify companies is by their si0e and the corporations act in Australia and its e$uivalents abroad have provisions relatin to a company6s classification via its si0e. Corporations Law has been structured for lare companies with a division between ownership and control with sinificant capital from the investin public. 3hile this is the classic model of the corporation, most Australian companies are small, family companies. &his model is therefore appropriate for only a tiny proportion of the mar!et companies with the larer number of small private companies out there. mall companies are still covered under the corporations act but typically more reulatory burdens on are placed on larer companies.
Both proprietary and private companies e"ist: 1 – %roprietary Companies
A proprietary company must: a) be limited by shares (8 above) or be an unlimited company ( above) with a share capital b) have no more than 9 non%employee members c) not do anythin that would re$uire the issue of a prospectus (prohibition on see!in investment from the public). #f a company doesn6t $ualify as a proprietary company, then it6s a public company and must comply with all the reulatory re$uirements associated with that. &he minimum number of persons is one (shareholder and director). 2 – %ublic Companies
As above, if a company doesn6t $ualify as a proprietar y company, then it6s a public company. A public company must have a minimum of directors, ? of whom must ordinarily reside in Australia. *owever, many enterprises structured themselves so that they @ust met the definition of a proprietary company to avoid reulatory provisions. &he overnment then redefined the proprietary company definition in s>A(?) of Corporations Act . &he act now identifies smaller companies on the basis of value and si0e of the business. A proprietary company is small if it satisfies ? of the followin criteria: a) the consolidated ross operatin revenue of the financial year of the company and any entities it controls is less than 789m b) the value of the consolidated ross assets at the end of the financial year of the company and the entities it controls (if any) is less than 7m c) the company and any entities it controls have fewer than 9 employees. & classifications of companies
After all this, we arrive at the followin possible combinations of different com panies with the proprietary limited (5pty ltd6) company bein the most prevalent.
Proprietary companies
1 – Limited by shares 98.2%
(no more than 50 non-employee shareholders)
3 – Unlimited with share capital
Public companies
1 – Limited by shares 0.7%
(all non-proprietary companies: s9 definition of public company) 2 – Limited by garantee
3 – Unlimited with share capital
! – "# liability c#mpany (mining only) 0.09%
Six different types of public and a nd proprietary companies James
Following on from my blog on company characteristics, I thought I would write a quick blog on the different types of companies that are common today.
Companies are classified accordin accor din to liability, si0e and where they are listed. 3e will discuss the first two and the resultin 4 common types of companies we arrive at. Classification according to member liability 1 – Companies limited by shares (!nown as 5limited liability6 companies)
&ypically, members are usually shareholders and their liability is limited to the nominal (nominal &ypically, capital is defined as the capital with which the company was incorporated) value of their shares plus any unpaid amount on their shares. As an e"ample, say you buy B*P shares at 789 for 899 s hares, then your liability is limited so that if B*P were to be sued, it is limited to the 789 paid. &his is sometimes conducted differently when you don6t fully pay for shares when the company floats. #f 7 was paid and 7 was then owed on the shares, then the remainin amount must be contributed should it be called upon. As we probably !now by now, the sinificance is that shareholders are not liable for the full amount. &his is !nown as the share capital method of corporate finance. Another method is by debt ; oin to a ban! and as!in for money to be lent. &his is a different contractual areement.
2 – Companies limited by guarantee (small and charitable oranisations)
&he difference with these companies is that members can place a uarantee on the company which may only be enforced on the windin up of the company and is not an asset of the company which may be chared durin its life. &hese companies have no share capital unli!e companies limited by shares. <ften non%profit companies and charities use this method. – !nlimited liability companies (partnerships)
&he unlimited liability company was the oriinal form of reistered company under the 8=>> 12 Act. #t is defined in Australia in the corporations act as a company whose members have no limit placed on their individual liability to contribute to the debts of the company. &he ole advantae is that this company is e"empt from the prohibition on reduction of capital (s?=A) which means money can be more freely ta!en out of the company6s capital base. &he clear disadvantae is that members miht not be aware of their unlimited personal liability when @oinin. &oday the unlimited liability company is used mainly by professional oranisations carried on in a partnership li!e many Leal and Accountin firms. " – #o liability companies ("clusively minin and resource companies)
#n Australia, companies may only be reistered as no liability where a) the company has share capital, b) the company6s constitution states that its sole ob@ects are minin purposes and, c) the company has no contractual riht under its constitution to recover calls made on its shares from a shareholder who fails to pay them s88?(?). s88?(?) of Corporations Act says constitution must state that the sole ob@ect is minin purposes. <riinally because minin is seen as particularly ris!y business and people were reluctant to invest. hares are part paid with the option of payin the remainder later. Classification according to si$e
&he other !ey way to classify companies is by their si0e and the corporations act in Australia and its e$uivalents abroad have provisions relatin to a company6s classification via its si0e. Corporations Law has been structured for lare companies with a division between ownership and control with sinificant capital from the investin public. 3hile this is the classic model of the corporation, most Australian companies are small, family companies. &his model is therefore appropriate for only a tiny proportion of the mar!et companies with the larer number of small private companies out there. mall companies are still covered under the corporations act but typically more reulatory burdens on are placed on larer companies.
Both proprietary and private companies e"ist: 1 – %roprietary Companies
A proprietary company must: a) be limited by shares (8 above) or be an unlimited company ( above) with a share capital b) have no more than 9 non%employee members c) not do anythin that would re$uire the issue of a prospectus (prohibition on see!in investment from the public). #f a company doesn6t $ualify as a proprietary company, then it6s a public company and must comply with all the reulatory re$uirements associated with that. &he minimum number of persons is one (shareholder and director). 2 – %ublic Companies
As above, if a company doesn6t $ualify as a proprietar y company, then it6s a public company. A public company must have a minimum of directors, ? of whom must ordinarily reside in Australia. *owever, many enterprises structured themselves so that they @ust met the definition of a proprietary company to avoid reulatory provisions. &he overnment then redefined the proprietary company definition in s>A(?) of Corporations Act . &he act now identifies smaller companies on the basis of value and si0e of the business. A proprietary company is small if it satisfies ? of the followin criteria: a) the consolidated ross operatin revenue of the financial year of the company and any entities it controls is less than 789m b) the value of the consolidated ross assets at the end of the financial year of the company and the entities it controls (if any) is less than 7m c) the company and any entities it controls have fewer than 9 employees. & classifications of companies
After all this, we arrive at the followin possible combinations of different com panies with the proprietary limited (5pty ltd6) company bein the most prevalent.
Proprietary companies
1 – Limited by shares 98.2%
(no more than 50 non-employee shareholders)
3 – Unlimited with share capital
Public companies
1 – Limited by shares 0.7%
(all non-proprietary companies: s9 definition of public company) 2 – Limited by garantee
3 – Unlimited with share capital
! – "# liability c#mpany (mining only) 0.09%
