What Is A Company Limited By Shares?
A company limited by shares is a type of company where the liability of a member is limited to any amounts unpaid on shares they have. A company limited by shares is set up under the Corporations Act 2001 and is registered with the Australian Securities and Investments Commissions, or ASIC.
You can quickly recognise a company limited by shares by the title of the company as it will have the word ‘limited’ as part of its company name. For example, ‘Sprintlaw Pty Ltd’.
A company limited by shares can be a proprietary (also known as private) company, or it can be a public company.
It is common for shares to be paid for up front by members. When this is the case, the members do not have any further liability. If shares are partially unpaid, then the members are liable for any unpaid amounts.
In a company limited by shares, a director of the company is generally not personally liable for company debt. There are exceptions to this rule — for example, if a director is in breach of their duties or obligations.
In Australia, a company limited by shares is the most common form of a company. Companies limited by shares are popular due to the protection it offers members and shareholders. If a company goes bust, members do not have to risk their personal assets, and shareholders do not assume any responsibility for any debts of the company. The only liability a shareholder would have, is if they haven’t paid for their shares that had been issued to them.
Companies limited by shares are distinct from companies limited by guarantee.Here at Sprintlaw, we have helped many businesses decide what business structure best suits them. We can register a company limited by shares on your behalf, and we also offer company secretarial assistance. Don’t hesitate to get in touch!
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