Procedure To Incorporate Proprietary Company: Steps And Requirements

Types of Companies

Discuss About The Procedure Incorporate Proprietary Company?

It is considered that incorporating a small proprietary company there are many formalities which have to be complied by promoters. Here are some following steps to incorporate a company with the ministry of government.

Firstly, promoters need to decide which type of company need to be incorporated. After that business structure of the desire company need to be decided. The company must desire to do a legal business throughout Australia. Therefore, taking care of corporate taxes or limited liability should be done. There is a huge difference between registering a company and registering a business name (Brimble & Blue, 2013).

• Not profit or charitable trust.
• Special Purpose Company.
• Registered Australian bodies.

In this, promoters need to choose the name of the company. There are few things which should be considered while making application for availability for the name of the company. A company cannot be incorporated with the name which is unwished or which is tantamount with or resembles with the name of any existing company. For the availability of the name of the company we have to apply to the same to the name availability. If anyone is the holder of the identical name then such person may able to incorporate with the name in some circumstances. There are only some characters which can be used with the name of the company. There are also some words and phrases which can be used only after the permission of the ministry of government. Some of them are (Rahman, 2013).

• Bank
• Royal
• Trust
• Incorporated

Some words are also cannot be used while incorporating company which may mislead people about company’s business. It may involve the Royal family, association with government or any ex-servicemen’s organization. A company can reserve its name by giving application whether such company yet not started its business. Such name can be reserve only for a period of two months and if a company wants to reserve such name for a period of more than two months then company needs to apply again for that. Ministry cannot reserve name for a long period of time it may prevent other people to use of such name. The name of the company cannot be similar with the registered Trade Mark or a Trade Mark which applied before the ministry.  The name of the company must end with the word ‘Proprietary Limited’ or ‘Proprietary’. In case the liability of the member of the company is limited to the unpaid amount then it is end its name with ‘Proprietary Limited’ and if member’s liability is unlimited then its name must end with ‘Proprietary’. There are also some abbreviations which can also be used with the name of the company (Butlin, 2013).

• Replaceable Rules
• Own Constitution, or
• Combination of both.

Name Availability

Replaceable rules are provided in Corporation Act. These are the established rules which can manage the company. If any company does not want create its business constitution then it can use the replaceable rules. Having replaceable rules means a company is not required to write their constitution and do not need to update them time to time.

A company can also choose the option of having written constitution for that company is required to write its business constitution and copy of that constitution must keep in company’s record every time.

In case when a proprietary company has only one officeholder then company is not require to adhere replaceable rule or written constitution. But when the company appoints another member or director then it is require adopting replaceable rule but later on it can be converted to a constitution (Gunningham & Sinclair, 2017).

Proprietary company can only invite investments from members, employees or subsidiaries of the company and cannot regulate any business activity which requires divulgation to investors.

• Director (Above 18 of age)
• Secretary (Above 18 of age)
• Member (there must be at least one member in the company)

A company must have its registered office. If there is no registered office then written permission for concerned address must be taken. Company doesn’t need to send written consent copy instead of that keep it on to register record (Popova, et al.2013).

• A company can contact to a private service provider which may help to register your company. They uses such software which directly access to ASIC’s systems. Private Service provider may take some particular amount for registering the company.
• A company can directly registered with the ASIC by filling “Form 201” Application for registration as an Australian company and mail such form to

With the ramified economic changes and increasing complexity of capital market, Australian securities exchange in society engaged in generating confidence in operations of ASX is reinforced across all trading venues and clearing settlement facilities with the collaboration of Reserve Bank of Australia’s oversight of financial system (Hartnett & Romcke, 2015).  In addition to this, the main role of Australian securities exchange in society is related to controlling several negative acts such as insider trading, destruction of capital market, putting cap on the market capitalization, market making. However, compliance of listing agreement and issuing the new rules and regulation is done by Australian securities exchange for the betterment of the society (Ali, et al. 2014). It is evaluated that when big companies wants to enter into cartel or some business combination in the market then it is for mostly controlled by the Australian securities exchange in society in the market. Furthermore, interest rate of the market is controlled and fixed by the reserve bank of Australia with the collaboration of Australian securities exchange in society. This level of process system not only put cap on the inflation but also controls the flow of cash in financial and capital market. Legal compliance of ethical business functioning of companies in Australia, is highly depends upon the rules and regulations issued by Australian securities exchange in Australian. However, some of the ill-intentioned persons enter into market making process with a view to create unwanted profit in market (Harris, Hargovan & Adams, 2013). This Australian securities exchange in society put surveillance on the market to save investors from the all the risk. However, listing rules, regulations and compliance of the same by the listed companies are assessed by Australian securities exchange in market. When the company is registered with ASIC make sure that the name of the company must be displayed whenever conducting the business. Every document must be displayed its ACN/ABN number on the documents. All the documents and details are updated time to time to Australian Securities Exchange. In addition to this, the present and future directions of the entity must be responsible and directed by the instructions given by Australian Security exchange for the betterment of society. Moreover, the trading policies and other issued rules are used by Australian Stock Exchange to regulate the market. It is observed that society is accompanied by the shareholders and investors and it is the prime duty of Australian Security exchange to control the fluctuation in market. However, it is considered that all the investment made by investors is subject to market risk (Agnew, 2013).

Governance Procedures

To apply their security to be listed with ASX listing an entity is required to satisfy following conditions-

• Fabrication and operations of the company is appropriate for listing requirements.
• Their shall be a written constitution or appendix 15A or 15B included (as required) and prospectus of security or PDS lodged with the ASIC and consent of ASX must be taken.
• For foreign entity that must be registered with corporation Act. If an entity is a Trust then it must be registered or an exemption is taken from ASIC for registration. Exemption holding entity must be an Australian company or any foreign company registered in Corporation Act (Rahman, 2013).
• Admission of free float at the time in its official list must be not less than 20%. There shall be not less than 300 nonaffiliated security holders and not less than the value of $2000
• If the entity is avail assets from promoters or from relatives, 2 years preceding the date of application than consideration must be restricted to some grounds.
• The entity has option to choose exercise price for the security not less than 20% in cash.
• An authorize persons should be appointed who is authorize and communicate with ASX for listing the security.
• The documents in writing which is agreed by the entity and any other documents send to ASX electronically.
• An entity is required to provide all its area on which it may operate and to what extend it will go. ASX will provide recommendation to follow and if such recommendation is not followed by the entity then suitable reason must be given for that.
• An audit committee must be stabiles for those who are covered in S & P all ordinaries Index. All the recommendation given by the ASX corporate governance council must be followed regarding audit committee and composition if covered in S & P/ ASX 300 Index. S & P/ASX 300 Index covered entities are require constituting remuneration committee consisting of non- executive directors.
• The entity is the going concern business and doing same business during the last 3 preceding financial years ‘(Farrar, 2008).
• Accounts must be audited of last 3 years. From the audited accounts of the financial years entity should apply within 90 days. Audited accounts of the entity must be given for the last half year if entity goes for admission before 75 days or more than 6 months when accounts of last financial year send it to ASX. A current financial position status of the company must be provided by the registered auditor firm or by the individual accountant.
• Profit of the company for consistent period of last three financial not less than $1 million.
• The company has not less than $4 million after deducting costs of fund rising as its Net tangible assets and market capitalization not less than $15 million. (Entity must not an investment entity)
• Total tangible assets of the entity must not be more than half as a cash or easily convertible to cash. If entity has its tangible assets half or more than half then entity has to make commitments that excess portion should spend to business objects. Business objects of the entity must clearly state (Rahman, 2013).

Australian security investment commission is an independent Australian government body that act as Australian corporate regulators. This commission indulged in controlling the investment market such as capital and financial market with a view to reduce the complexity and cumbersome process of Australian stock market (McQueen, 2016). There are several companies who indulged in market making or insider trading with a view to increase their share price. Therefore, Australian security investment commission prepares investment policies and regulates compliance of companies related to the listing rules and regulations. It is observed that if company wants to increase the overall effectiveness in market then they have to comply with all the listing rules and corporation laws. It is observed that Australian security investment commission regulate the investment market and ethical business functioning of companies in market for the betterment of investors (Butlin, 2013). Australian security investment commission keep surviliance on the merger, amalgamation and disclosure requirement of companies and regulating trading system of Australian market in capital and financial market. In addition to this, other acts are also done by Australian security investment commission with a view to comply with the incorporation acts of companies. It is evaluated that after processing the application Australian security investment commission provides ACN and which can be used by companies to apply for ABN. Afterward, Australian security investment commission sends the certificate of Incorporation. ASIC also send a corporate key. It is a unique number which helps to create online account and for updating details. It is also observed that all the companies listed needs to get permission for quotation of its security for its main class of security. This level of process system is implemented by Australian security investment commission to strengthen the legal compliance and saving investors from the scams and other negative business functioning of organization. Furthermore, Australian security investment commission also regulates the corporate behavior of foreign entity. This foreign entity after entering into joint venture with the domestic company must be registered under corporation Act. If an entity is a trust then it must be registered or an exemption is taken from ASIC for registration. This has shown that Australian security investment commission has made more strengthen rules and regulations for foreign companies while taping the Australian market for the business purpose. It is also evaluated that Australian security investment commission has developed software which directly access to ASIC’s systems. All the companies listed will report to Australian security investment commission through this ASIC’ system.

References

Agnew, J. (2013). Australia’s retirement system: Strengths, weaknesses, and reforms. Center for Retirement Research Issue Brief, 13-5.

Ali, P., Anderson, M. E., McRae, C. H., & Ramsay, I. (2014). The financial literacy of young Australians: An empirical study and implications for consumer protection and ASIC’s National Financial Literacy Strategy.

Brimble, M., & Blue, L. (2013). Tailored financial literacy education: An indigenous perspective. Journal of Financial Services Marketing, 18(3), 207-219.

Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge University Press.

Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge University Press.

Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge University Press.

Farrar, J. (2008). Corporate governance: Theories, principles and practice. Oxford University Press.

Gunningham, N., & Sinclair, D. (2017). Leaders and laggards: next-generation environmental regulation. Routledge.

Harris, J., Hargovan, A., & Adams, M. A. (2013). Australian corporate law(Vol. 2). LexisNexis Butterworths.

Hartnett, N., & Romcke, J. (2015). The predictability of management forecast error: A study of Australian IPO disclosures.

McQueen, R. (2016). A Social History of Company Law: Great Britain and the Australian Colonies 1854–1920. Routledge.

Popova, T. T., Georgakopoulos, G., Sotiropoulos, I., & Vasileiou, K. Z. (2013). Mandatory disclosure and its impact on the company value. International business research, 6(5), 1.

Rahman, A. R. (2013). The Australian Accounting Standards Review Board (RLE Accounting): The Establishment of Its Participative Review Process. Routledge.

Rahman, A. R. (2013). The Australian Accounting Standards Review Board (RLE Accounting): The Establishment of Its Participative Review Process. Routledge.