Generally, companies comprise 2 main types: proprietary (private) and public companies – see section 112 of the Corporations Act – either of which may be limited or unlimited.
Limited public companies may be limited through the issue of shares or limited by guarantee – s.112(1).
A company limited by guarantee is most usually one formed as a non-profit trading entity, following the principle of having members’ liability restricted to an amount they each personally guarantee.
Public Company Requirements
As a public company, one limited by guarantee must generally adhere to the Act’s requirements for public companies, including requiring:
- A constitution
- At least 3 directors
- A Company Secretary
- Annual accounts audited, lodged with ASIC and provided to members
- An Annual General Meeting.
Other sections of the Act also apply to such companies, such as s.254SA which prohibits paying a dividend to members.
Removal of “Limited” from Name
Under s.150 a guarantee company may apply to ASIC (using Form 432 “Application to Approve Registration of a Company Name Without the Word ‘Limited’”) for the word “Limited” to be omitted from its name – if its constitution:
- Requires it to pursue charitable purposes only and to apply its income to those purposes; and
- Prohibits the company paying fees to directors and making distributions to its members.
ASIC Regulatory Guide 50 provides more guidance on omitting the word “Limited” from company names.
Contributions in a Winding-up
Under s.518 in a liquidation of a company limited by guarantee a member need not contribute more than the amount the member has undertaken to contribute to the company’s assets if the company is wound up.
*Originally written by Company Secretary, an Australian virtual company secretary service.