Company types
Key points:
- If you have chosen a company as your business structure, you need to decide what type of company it will be.
- Under the Corporations Act companies can be classified by the liability of their members and whether they are public or proprietary.
- The type of company affects issues like liability, fundraising and reporting requirements.
- Some legal obligations apply to all companies. Others apply to specific company types.
- The main company types are proprietary and public. Most small business companies are proprietary companies limited by shares.
Companies and company types
A company is a structure that is a separate legal entity It has its own property, rights and obligations like an individual person. For example, it can own and sell assets, be a party to a contract, and sue and be sued.
Other kinds of business, such as sole traders and partnerships, are not companies. Learn about the most common kinds of business.
If you’ve chosen to start a company, you must decide what type of company you want. You may want to get expert advice on this.
There are 2 main types of company: proprietary companies and public companies. Within each type, there are categories based on who is liable for business debts.
Proprietary company
Proprietary companies must not offer their shares to the public. They also have a limit on the number of non-employee members.
A proprietary company can be:
- limited by shares (most common) – an individual member is only liable for the company's debts up to the amount they have agreed to pay for their shares
- unlimited with a share capital – individual members may be liable for all the company’s debts.
The most common type of company for small business is a proprietary company limited by shares. The names of these companies end in ‘Proprietary Limited’ or ‘Pty Ltd’.
Public company
Public companies can offer shares to the public. There is no limit on the number of members they can have. In Australia, many public companies are listed on the Australian Stock Exchange. These are known as ‘listed companies’.
A public company can be:
- Limited by shares (most common) – an individual member is only liable for the company's debt up to the amount they have agreed to pay for their shares.
- Unlimited with a share capital – individual members may be liable for all the company’s debts.
- Limited by guarantee – an individual members’ liability for the company’s debts is limited to the amount they agree to contribute if the company is wound up. This type is commonly used for registered charities.
- A ‘no liability’ company – used for some companies in the mining industry. Individual members are not liable for calls on partly paid shares.
The names of public companies limited by shares end in ‘Limited’ or ‘Ltd’.
Special purpose company
Some proprietary and public companies can also be special purpose companies. These are companies that have particular non-profit purposes. They pay a reduced annual review fee.
The types of special purpose companies are:
- superannuation trustee companies that act as the trustee of a regulated superannuation fund
- home unit companies that manage a block of units or apartments
- charity companies that exist for charitable purposes
- existing companies that hold particular licences or registrations under old laws.
Find out more:
Foreign company
If foreign companies do business in Australia, they must follow Australian laws and register with ASIC:
Company types and information on this website
Many of the rules in the Corporations Act 2001 apply to every type of Australian company. Because of this, a lot of the information in the Companies section of this website is relevant to all companies.
When a rule only applies to one type of company, we try to make this clear on the website. For example, we put the relevant company type in a page title or heading, or at the beginning of a sentence.
Our Companies building blocks pages focus on proprietary companies limited by shares, as this is the most common company type.