A proprietary limited company, often abbreviated as Pty Ltd, is the most common company structure in Australia. Upon registration, the company is issued with an ACN (Australian Company Number). Proprietary limited companies cannot offer shares to the general public.
Under the Corporations Act 2001 (section 41A), a proprietary company must:
- be limited by shares or be an unlimited company with a share capital;
- have at least 1 shareholder (or member) and have no more than 50 non-employee shareholders;
- have a registered office address in Australia;
- not do anything that would require disclosure to investors under Chapter 6D of the Corporations Act; and
- have at least 1 director who ordinarily resides in Australia (note: A proprietary limited company is not required to appoint a Company Secretary, however if 1 or more is appointed, 1 must ordinarily reside in Australia).
Proprietary companies can be large or small. A small proprietary company must satisfy 2 out of the following 3 criteria in a financial year:
- consolidated revenue for the financial year is less than $25 million;
- value of consolidated gross assets at the end of the financial year is less than $12.5 million; and
- the company has less than 50 employees.
Large proprietary companies must prepare and submit financial reports and directors’ reports each financial year to ASIC, the corporate regulator. Small proprietary companies do not have to submit these reports unless requested by ASIC, or unless they are foreign controlled.
Small Foreign Controlled Company Requirements
A small proprietary company that is controlled by a foreign company (for all or part of the financial year) must comply with certain financial reporting and audit reporting requirements. These financial reports must be audited and lodged with ASIC within four months of financial year end. However, small foreign controlled proprietary companies (that are not part of a large group) can seek relief from the requirement to appoint auditors and prepare and lodge financial reports if the directors resolve to rely on the relief provided by ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204 and lodge notice of that resolution within the time requirements.