Have you ever wondered what a company is and whether the structure is the right fit for you? On average, there are over 20,000 companies registered in Australia each month. Before you join them, here's what you need to know.
The owners of a company are known as either members or shareholders. The ownership of shares is a form of property and confers the right to vote, transfer and sue derivatively.
Companies are managed by company officers who are called directors and company secretaries.
Company officers must comply with the legal obligations of the Corporations Act. Failure to do so may result in regulatory actions by ASIC.
A company is a separate legal entity. By law, a company is treated as a separate person; they are separate from the people who formed it. A company has the ability to incur debt, sue and be sued. In fact, the rights and duties of a company are separate from the rights and duties of its directors and shareholders. Therefore, the liability of shareholders is limited as the company is a separate legal entity and the owner's personal assets can't be touched to pay for debts of the company.
Liability is the legal obligations of a person or organisation. Limited liability is the condition in which shareholders are legally responsible for company debts, but is limited to the value of each member's shares.
To have perpetual succession means that an organisation's existence continues despite the death, bankruptcy, change in membership or an owner/member exit.