TYPES OF COMPANIES
‘Corporation’ refer to any type of artificial legal entity. A corporation is defined in s 57A to include:
A company; and
Any body corporate
An unincorporated body
The Corporation Act classifies companies in a variety of ways:
I- The liability of members
II- Public v Proprietary companies
I- Classification according to liability of members
Companies limited by shares: such companies have the ability to raise funds (referred to as equity or
share capital) by issuing shares of different classes to investors. This type of company are formed on
the principle of having the liability of its members limited to the amount, if any, unpaid on the shares
respectively held by them. The shares are personal property of the members and the shares are freely
transferable.
Companies limited by guarantee: the liability of the members is limited to the amounts that they
have guaranteed to contribute if the company is wound up. By law, they cannot issue shares, and they
will have to use outside funding. They cannot distribute earnings (dividend) to their members, thus
they are not usually used for trading.
Unlimited companies with share capital: it is a separate legal entity with a share capital; however,
there is no limit on the liability of the members to pay the company’s debts when the company is
wound up.
No liability companies: they are limited to the mining industry. Shareholders with partly paid shares
do not have to pay calls for unpaid capital and a no liability company cannot recover unpaid capital
from their shareholders. However the shareholders who do not pay the call will lose their shares, but
there will be no further liability.
‘Corporation’ refer to any type of artificial legal entity. A corporation is defined in s 57A to include:
A company; and
Any body corporate
An unincorporated body
The Corporation Act classifies companies in a variety of ways:
I- The liability of members
II- Public v Proprietary companies
I- Classification according to liability of members
Companies limited by shares: such companies have the ability to raise funds (referred to as equity or
share capital) by issuing shares of different classes to investors. This type of company are formed on
the principle of having the liability of its members limited to the amount, if any, unpaid on the shares
respectively held by them. The shares are personal property of the members and the shares are freely
transferable.
Companies limited by guarantee: the liability of the members is limited to the amounts that they
have guaranteed to contribute if the company is wound up. By law, they cannot issue shares, and they
will have to use outside funding. They cannot distribute earnings (dividend) to their members, thus
they are not usually used for trading.
Unlimited companies with share capital: it is a separate legal entity with a share capital; however,
there is no limit on the liability of the members to pay the company’s debts when the company is
wound up.
No liability companies: they are limited to the mining industry. Shareholders with partly paid shares
do not have to pay calls for unpaid capital and a no liability company cannot recover unpaid capital
from their shareholders. However the shareholders who do not pay the call will lose their shares, but
there will be no further liability.
