Proprietary Company Limited By Shares

A proprietary company limited by shares, often abbreviated as “Pty Ltd,” is a common business structure in many countries, including Australia. It is a privately held company that operates as a separate legal entity, distinct from its owners or shareholders. In this informative page, we will explore the key features, advantages, and considerations associated with a proprietary company limited by shares.

Key Features:

1. Limited Liability: One of the primary benefits of a proprietary company limited by shares is limited liability protection. The liability of shareholders is generally limited to the amount they have invested in the company. This means that personal assets of shareholders are generally protected in the event of business debts or legal actions against the company.

2. Separate Legal Entity: A proprietary company limited by shares is considered a separate legal entity, distinct from its owners. This means that the company can enter into contracts, own assets, incur debts, and engage in legal proceedings in its own name.

3. Shareholders: Pty Ltd companies must have at least one shareholder and can have a maximum of 50 non-employee shareholders. These shareholders own the company through shares and have the right to receive dividends and participate in the decision-making process based on their shareholdings.

4. Directors and Officers: A proprietary company limited by shares must have at least one director, who is responsible for managing the company’s operations and ensuring compliance with legal obligations. The director(s) may also be a shareholder, but it is not a mandatory requirement. Directors have certain legal duties and responsibilities towards the company and its shareholders.

5. Share Capital: Pty Ltd companies issue shares to raise capital, which represents the ownership interest of shareholders. The company’s share capital is divided into shares of a fixed value. Shareholders can buy, sell, or transfer shares, subject to any restrictions outlined in the company’s constitution or shareholders’ agreement.