FAQ & Links

SHAREHOLDERS AND SHARES

Shelf Company Services Pty Ltd does not provide advice on the issue of shares. The giving of such advice is regulated by the Corporations Act 2001 & Corporations Regulations 2001. If you require advice your accountant or lawyer may be able to assist you.

Listed below is basic information relating to shareholders and shares. It is not a substitute for obtaining professional advice in relation to these matters and does not address taxation issues.

Minimum requirements

A company must have at least 1 shareholder. Each shareholder must hold a minimum of 1 share.

Number of shares

A company may issue as many shares as it wishes. The Corporations Act 2001 no longer requires a fixed 'Authorised Capital' to apply to the company.

The number of shares actually issued will depend on:

• Whether some of the funds for the operation of the company are to be provided as 'equity' (i.e. funds paid to the company to pay for shares issued and not normally repayable) or as a repayable 'loan'.
• Whether the initial shareholders want to have shares available to sell to possible new shareholders in the future.

If you are uncertain how many shares to issue and need to register the company before obtaining professional advice the company can be registered with the minimum practical number of shares and further shares issued at a later date. It is reasonably easy and inexpensive to issue further shares.

Class of shares

Shares in a company may be divided into different classes. The most common classis an 'Ordinary'share which entitles the holder to:

• Vote at meetings of shareholders of the company (or record a resolution if there is only one shareholder).
• Receive dividends as decided by the director(s).
• Participate in the distribution of surplus profits and assets of the company when it is wound up.

Other classes of shares have various combinations of the above basic rights and/or have preferential rights over other classes. Examples of the use of a class of shares would be to give greater voting power to a particular shareholder or, in certain circumstances, to allow a family company to direct dividends to family members.

Our standard company comes with a wide range of classes for use if required.

Issue price, partly paid shares

Traditionally, most shares are issued for $1.00 and are fully paid on registration of the company.

However, shares can be issued with any issue price and any portion of that issue price may remain owing to the company. Please see 'Shareholder's liability' below.

Shareholder's liability

Shareholders of a company are not liable (in their capacity as shareholders) for the company's debts. As shareholders, their only obligation is to pay the company any amount unpaid on their shares if they are called upon to do so (e.g. when the company is wound up and owes money to creditors).

However, particularly if a shareholder is also a director, this limitation may be affected by other laws and commercial practices.

Shareholder's position in the company

The shareholders of a company own the company, but the company has a separate legal existence and the company's assets belong to the company.

Whilst the management of the company is the responsibility of the directors, shareholders can make decisions about the company by passing a resolution, usually at a meeting. The most important power of those shareholders who have a right to vote is the power to appoint or remove directors.