If you own a company in Australia you might be interested
in incorporating your company and being able to sell shares
of the company to stockholders.
In Australia being incorporated is called being a
proprietary company. This is actually considered a
corporation and there are some limitations to having this
kind of corporation. One of these limitations is you can
not have more than 50 shareholders in the company. This
means you have to be careful who you sell shares to so that
you do not go over this limit.
Another limitation is the fact that the shares can not be
offered to the public, but must sometimes use a prospectus
to raise funds. There are other restrictions that a Pty.
Ltd. corporation must adhere to as well; you should consult
with your legal advisers before deciding for sure if you
want to be a limited corporation.
Stockholders like to invest into companies this way because
they can easily put in a little money and experience great
growth. You might be interested in incorporating your
company because you can easily get a great amount of money
invested into your company that you can use as capital to
make more money off the company.
If you have big projects coming up that you want to use to
grow your company and make much more money than you have
before this might be a great option as it will be
attractive to investors.
One important part of being an incorporated company is that
you have to sell shares (you can be the sole share holder
as well though). This has its pros and cons of course. When
you sell shares you can in fact lose your interest in the
company. Meaning if you don't hold over 51% of the shares
you can actually be out voted when big decisions are being
made. That is if everyone votes against you so make sure
you are confident in how you have structured your share
holding.
A good thing about being incorporated is that you and the
stock holders have a lot less liability in the company. In
a limited corporation you usually have unlimited liability
which means the most you can usually lose is your initial
investment into the company.
This means if you start out by investing into the company
with 1.5 million dollars and it grows to 6 million dollars
but then the company goes bankrupt you will lose all that
is invested. If you in fact cash out before the bankruptcy
then you would get close to $6 million (minus any taxes, of
course). Still though you only invested the 1.5 million so
that is all you are considered to have lost.
The protection of a limited company in Australia really
depends on how much you, as an investor, front to the
corporation. In most cases this is all you can lose by
investing in the company, and you will not have to worry
about any of your personal assets if the company goes
south. Again seek legal advice on if this structure is the
best for you.
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Discover how you can register a new company in Australia.
It can be a simple process but you have to know what the
steps are. Visit http://companiesnow.com.au/ for more
information
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