Chapter 3

Types of Companies

Chapter Summary

1REGISTRATION OF A COMPANY

The application (Form 201 or under electronic company registrations scheme) must be lodgedat ASIC (s 117(1)) and must include (s 117(2)):

  • the type of company (eg, a proprietary company or a public company)
  • the class of company (eg, a company limited by shares, or guarantee, or both, or anunlimited company or a no-liabilitycompany)
  • the company’s proposed name (unless the Australian Company Number (ACN) is to be used)
  • whether the company has a company constitution or will relyentirely on replaceable rules
  • name address of each person who consents to become a member, director or secretary
  • the address of the company’s proposed registered office and principal place of business
  • details of each member’s shareholdings, including whether the shares are fully paid
  • details of the applicant for registration
  • the State or Territory in which the company is taken to be registered
  • whether, on registration, the company will have an ultimate holding company (defined in s 9)
  • payment of the prescribed fee.

ASIC may then give the company an ACN, register the company and issue a certificate of registration: s 118(1). Thecertificate states the company’s name, ACN, type and date of registration, and State or Territory in which thecompany is taken to be registered.

2COMPANY NAMES

2.1Protection of names

Protection of company, business and domain names is available through registration of the name as a trademarkunder the Trade Marks Act 1995 (Cth). Protection may also be available through the common law tort of passing offand the misleading or deceptive conduct provisions of the Trade Practices Act 1974 (Cth) and the various State andTerritory Fair Trading Acts.

2.2Types of company name

A company may have a name or use its ACN: s 148(1). ASIC assigns a unique ACN on registration.

In public companies with limited shareholder liability or with liability limited by guarantee, the word ‘Limited’ or theabbreviation ‘Ltd’ must be stated at the end of the company name: ss 148(2) and 149(1). In proprietary companies withlimited shareholder liability, the words ‘Proprietary Limited’ or the abbreviation ‘Pty Ltd’ must be stated at the end of thecompany name: ss 148(2) and 149(1).

The word ‘Proprietary’ or the abbreviation ‘Pty’ must be stated at the end of thename of an unlimited proprietary company: ss 148(3) and 149(1). A no-liability company must have the words ‘Noliability’ or the abbreviation ‘NL’ at the end of its name: ss 148(4) and 149(1).

ASIC may register a company limitedby guarantee without ‘Limited’ in its name if its constitution requires the company to pursue charitable purposes only:s 150(1)(a). The penalty for contravention is five penalty units: s 1311, Sch 3 item15.

2.3Use of company name

A company must state its company name on all its public documents (defined in s 88A, and Practice Note 47para 19 lists examples of public documents) and negotiable instruments: s 153(1). If the company’s ACN is not used as its name, the company must also state itsACN on its public documents and negotiable instruments: s 153(2). If the company’s name appears on two or morepages of the document, this must be done on the first of those pages: s 153(2). The penalty for contravention of s 153is 10 penalty units, or imprisonment for three months, or both: s 1311, Sch 3 item 17. (A company does nothave to state its ACN on receipts such as cash register receipts: s 154.)

Practice Note 47, para 63, notes that obvious spelling mistakes and other minor errors that would not confuse or mislead will not breach s 153, but the following would not comply with s 153:

  • the omission of ‘Limited’ (eg AtkinvWardle(1889) 5 TLR 734)
  • a wrong ordering of the words making up the company’s name
  • the omission of an ‘&’
  • abbreviating ‘Michael’ to ‘M’ (eg Fancy Goods LtdvMichael Jackson (Fancy Goods) Ltd[1968] 2 QB 839)

In Jenice Ltd v Dan (1994) 12 ACLC 3,209, it was held that amisspelling by theomission of a letter in the middle of a word was distinguishable from the omission of a whole word.

2.4Availability of company name

A particular name is available as a company name unless the name is:

  • identical to a name that is reserved or registered under the Corporations Act (s 147(1)(a))
  • identical to a name that is included on the business names register (s 147(1)(b))
  • unacceptable for registration under the Corporations Regulations (s 147(1)(c)).

Schedule 6 of the Corporations Regulations specifies howthe availability of names is determined.

“Virgin Mary’s” was found undesirable in Little v ASC(1996) 14 ACLC 1730; (1996) 22 ACSR 226.

A company or an individual may apply to ASIC to reserve a company name, and if the name is available ASIC mustreserve the name (s 152(1)) for two months, or such longer period as ASIC allows: s 152(2).

The minister may give consent to a name being available to a company even if the name is identical to one

reserved, registered or unacceptable for registration: s 147(2). The consent may be subject to certain conditions:s 147(3).

2.5Change of name

For a company to change its name, it must pass a special resolution adopting the new name and apply to ASIC: s 157(1). Subject to the availability of the proposed name, ASICmust change the company’s name and registration details: s 157(3). ASIC also has power under s 158(1) to direct a company in writing to change its name (within 2 months: s 158(2)) where:

  • the name should not have been registered in the first place; or
  • the company has breached a condition under s 147(3) relating to ministerial consent.

The penalty forcontravention is 50 penalty units or imprisonment for one year, or both: s 1311, Sch 3 item 20. If the companydoes not change its name within two months, ASIC may change the company’s name to its ACN and alter the details ofthe company’s registration accordingly: s 158(3).

If the registered name of a company is changed through either s 157or s 158, then ASIC must issue a new certificate of registration: s 160.

Section 161(1) provides that a change of company namedoes not:

  • create a new legal entity; or
  • affect the company’s existing property, rights or obligations; or
  • render defective any legal proceedings by or against the company: s 161(2).

2.6Business names

Business name registration is governed by state & territory Business Names Acts and is not the same as company name registration. Registered business namesare included in the national business names register. Searches of thisregister are possible through the relevant business names registration office in each State or Territory. All registeredbusiness names are also listed on ASIC’s web site.

Registration of a business name prior to the commencement of trading is compulsory, and failure to register mayresult in a fine. The purpose ofbusiness name registration is to identify the owners of a business operating under a particular business name. For example, B.M. Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd(1976) 12 ALR 363 (an eg of passing off).

2.7Domain names

To register a ‘.au’ domain name, an application must bemade to .au Domain Administration Ltd (known as auDA) at: Further information is available at this site.

2.8Trademarks

A trademark is a distinctive mark or symbol that identifies the origin of goods or services distinguishing them from acompetitor’s goods and services. Although trademark registration is not compulsory, registration gives the legal ownerthe right to commence court action for infringement. IP Australia registers trademarks in Australia. Business, companyand domain names can be protected through registration as a trademark. Prior to applying for registration of abusiness, company or domain name, a search of the trademark database at should be made todetermine whether there are any registered or pending names similar to the proposed name.

3Registered office

A company must have a registered office in Australia, and any correspondence to the company may be addressed to thisoffice: s 142(1). Documents may also be served on a company by leaving them at, or posting them to, the company’sregistered office: s 109X(1). Where a company changes its registered office address, it must notify ASIC within 14 days: s 142(2). The penalty for contravention of ss 142(1) or (2) is fivepenalty units: s 1311, Sch 3 item 9.

3.1Change of registered office address to a director’s address

If the company is not the occupier of the registered office, unders 100 the company must be able to provide ASIC with the occupier’s written consent to the company’s use of thepremises as its registered office: s 143(1). The penalty for contravention of s 143(1) is five penalty units: s 1311,Sch 3 item10.

If ASIC becomes aware that the occupier haswithdrawn consent to use the premises, then ASIC can change the company’s registered office address to the residentialaddress of a director of the company: s 143(2).

3.2Display of company name at registered office

A company’s name must be prominently displayed wherever it carries on business that is open to the public: s 144(1). Public companies (only) must also prominently display their company name and the words‘Registered Office’ at the company’s registered office address: s 144(2). The penalty for

contravention of s 144 is 10 penalty units, or imprisonment for three months, or both: s 1311, Sch 3 item 11.

3.3Opening hours of registered office

There is no requirement for proprietary companies to have their registered office open to the public.

Public companies must open their registered office to the public eachbusiness day, either during the specified standard hours or during certain chosen permitted hours: s 145(1). Thestandard hours each business day are from at least 10 am to 12 noon, and from at least 2 pm to 4 pm. As an alternative,

the company may also choose at least three hours each business day between 9 am and 5 pm.

Where a public company chooses its own opening hours for its registered office, the hours must be specified in itsapplication for registration as a company: s 145(2). If a public company proposes to change its chosen opening hoursafter registration, the company must notify ASIC prior to the change: s 145(3). The penalty for contravention ofs 145(1) or (3) is five penalty units: s 1311, Sch 3 item12.

InINVENTION FINANCE PTY LTD V FLAVEL (1988) 6 ACLC 408, it was held that ‘openand accessible to the public’ meant that members of the public could attend for the purpose of conducting

business and this would not be possible in an unattended vacant room or improperly fitted-out office. The registered office can be a residential house, but this must be clear to members of the public. In this case, the registered office was not ‘open and accessible to the public’ in view of the nature of the residential premises,the frequent absence of any person within the premises and the absence of any invitation to the public to haveunimpeded access and entry to the office.

3.4Principal place of business

A company must notify ASIC of any changes to its principal place of business within 14 days: s 146(1). The penalty for contravention of s 146(1) is five penalty units: s1311, Sch 3 item13.

Section 100 of the Corporations Act 2001 specifies how to determine the address of the registered office of acompany. In Golden Orchid v Comax(1995) 13 ACLC 1,091 the Court held that:

  • Section 100 of the Corporations Law required a company to specify the full address of the relevant office, including where applicable, the number of the room and of the floor or level of the building on which theoffice is situated.
  • Golden Orchid had only specified that its office was to be found at 274 Victoria Street, hence service at this address was sufficient to satisfy the requirements of a statutory demand.

4Deregistration

Section 119 provides that:

  • a company comes into existence as a body corporate at the beginning of the day on which it is registered;
  • the company’s name is the name specified in the certificate of registration; and
  • a company remains in existence until it is deregistered.

4.1Voluntary deregistration

The following persons may lodge an application with ASIC to deregister a company (s 601AA(1)):

  • the company
  • a director or member of the company
  • a liquidator of the company.

Where a company lodges an application, the person to whom notice is to be given of deregistration must benominated: s 601AA(1). The applicant must give ASIC any information that ASIC requests about current or formerofficers of the company: s 601AA(3).

Under s 601AA(2) a person may apply for deregistration only if:

  • all the members of the company agree to the deregistration
  • the company is not carrying on business
  • the company’s assets are worth less than $1000
  • the company has paid all fees and penalties under the Corporations Act
  • the company has no outstanding liabilities
  • the company is not a party to any legal proceedings.

Under s 601AA(4), if ASIC is not aware of any failure to comply with ss 601AA(1) to (3), it must give notice of theproposed deregistration on the ASIC database and in the Gazette. ASIC may then deregister the company twomonths later: s 610AA(4). ASIC must give notice of deregistration to the applicant or tothe person nominated in the application to be given the notice: s 601AA(5).

4.2ASIC-initiated deregistration

ASIC may decide to deregister a company under s 601AB(1) if:

  • the company’s response to a return of particulars given to the company is at least six months late
  • the company has not lodged any other documents in the past 18 months
  • ASIC has no reason to believe the company is carrying on a business.

ASIC may also decide to deregister a company if:

  • the company’s review fee in respect of a review has not been paidin full at least 12 months after the due date for payment: s 601AB(1A)
  • in circumstances related to the company’s winding up.

Section 601AB(3) provides that if ASIC decides to deregister a company under s 601AB, it must give notice of theproposed deregistration:

  • to the company
  • to the company’s liquidator
  • to the company’s directors
  • on the ASIC database
  • in the Gazette.

ASIC may then deregister the company two months after the Gazette notice: s 601AB(3).

4.3Effect of deregistration

A company ceases to exist on deregistration: s 601AD(1), but officers of the company may still be liable for things done before the company was deregistered (the note to s 601AD(1)).

All of a company’s property vests in ASIC on deregistration: s 601AD(2) and ASIC has all the powers of anowner vested in it (s 601AD(4)) but only takes the same rights that the company had ( s 601AD(3)).

Where the property that vests in ASIC was held by the company on trust, ASIC continues to act as trustee of that property:s 601AE(1). Where the property that vests in ASIC was not held by the company on trust, ASIC may dispose of or dealwith the property as it sees fit and apply any money to the payment of expenses of the company: s 601AE(2).

The persons who are directors immediately before deregistration must keep the company’s books for three years after deregistration: s 601AD(5). Thepenalty for contravention is five penalty units: s 1311, Sch 3 item 150. This is a strict liability offence: s 601AD(6).

5UPDATING ASIC INFORMATION

Previously, each company had to lodgean annual return with ASIC by 31 January each year.

5.1Extract of particulars

Under the new system, each company has a review date – either the anniversary of the company’s registration or a different date approved by ASIC under s 345C: s 345A(1). (The companymay apply under s 345B for a different review date).

Within two weeks after each review date for a company, ASIC must give to the company an extract of particulars for thecompany (s 346A(1)) which must state the date of issue (s 346A(3)) and includes:

  • ACN
  • company name
  • address of registered office and principal place of business
  • details of each director and the company secretary
  • issued shares
  • details of shareholders.

Within 28 days of the date of issue (s 346C(3)(a)), tThe company must respond to an extract of particulars that it receives if any particular set out in the extract is incorrectas at the date of receipt: s 346C(1).

5.2Solvency resolution

Where a company has not lodged a financial report with ASIC within 12 months before the review date, the directors ofa company must pass a solvency resolution within two months after each review date for the company: s 347A(1) and (2). If the directors:

  • pass a negative solvency resolution, the company must notify ASIC within seven days: s 347B(1);
  • do not pass a solvency resolution as required under s 347A, thenthe company must notify ASIC within seven days after the end of the two-month period following the reviewdate: s 347B(2).

The obligation is on the company, not the directors: s 347B(2), so as to avoid possible self-incrimination.

5.3Return of particulars

Under s 348A(1) ASIC can require that a company respond to a return of particulars where:

  • the company has not paid the company’s review fee by the due date;
  • ASIC has grounds to suspect that information recorded on the Register of Companies maintained by ASIC may beincorrect; or
  • the company has not lodged any documents with ASIC for a period of 12 months.

The return of particulars must specify the date of issue: s 348A(3). Under s 384B, ASIC may require that a companyprovides answers to particular questions contained in the return of particulars.

Before lodging a response to a return of particulars, ASIC may require that the directors of a company pass a solvencyresolution: s 348C(2)(a). The response to the return of particulars must then state whether the resolution passed wasa positive solvency resolution or a negative resolution: s 348C(2)(b).

The response must be lodged within 28 days after the date of issue of the return:s 348D(2)(a).

6THE SEPARATE LEGAL ENTITY PRINCIPLE & CORPORATE VEIL

Under theseparate legal entity principle, a company has its own corporate personality and legal capacity. A company enters into contracts and holds property using its corporate name, has its own assets, and can sue and be sued in the corporate name. Examples of the principle are:

  • SALOMON V SALOMON AND COMPANY LIMITED [1897] AC 22; [1895-9] ALL ER REP 33
  • LEE V LEE’S AIR FARMING LTD [1961] AC 12
  • MACAURA V NORTHERN ASSURANCE COMPANY LIMITED [1925] AC 619

(the decision would be different in Australia today, due to to s 17 of the Insurance Contracts Act 1984 (Cth) which modifies the common law position regardinginsurable interest).

As a consequence of a company’s separate existence, a ‘corporate veil’ or ‘veil of incorporation’ is said to arise betweenthe company and its shareholders and directors.

As the veil may disadvantage creditorsif shareholders or directors have acted improperly, the court may “lift” the veil. The traditional common law categories of cases in which the corporate veil has been

lifted includeagency, fraud, corporate groups, trusts. Statutory lifting of the veil can occur if the company enters into a voidable transaction under s 588FE(1), or if the directors trade insolvently under s 588G, or if a company gives financial assistance to a person for the purposes of acquiring shares in that company or a holding company: s 260A

7TYPES OF COMPANIES

7.1Proprietary and public companies

A public company is a company other than a proprietary company (s 9) so a company must be either public or proprietary. A proprietary company is a company that is registered as, orconverts to, a proprietary company under the Corporations Act 2001: s 45A(1).