What we Do
Greyson Legal are experienced corporate lawyers, principally assisting small and medium-sized enterprises (SMEs) - whether initial start-ups, existing business owners, not-for-profits or charities.
We endeavour to:
- understand the industry within which you operate your Business or organisation;
- understand your Business and organisational goals;
- help you achieve your objectives; and
- add value to your Business or organisation through the corporate law services we provide.
Our corporate legal services include:
- the formation of a company (company incorporation)
- company structuring
- mergers and acquisitions
- directors' duties
- shareholder rights
- statutory compliance
- interpretation of the Corporations Act 2001
- drafting, review and advice re Shareholder Agreements | Share Sale Agreements
- Buy-Sell Agreements
- review of company constitutions
- business succession planning
- how corporate franchisors manage their franchise network
- how company's manage and protect their IP
- dispute resolution
- general corporate law advice
Not-for-Profits and Charities
- registration with ASIC as a public company limited by guarantee | advice re compliance with the Corporations Act 2001 (Cth)
- registering as a charity with the Australian Charities and Not-for-profits Commission (ACNC)
- assisting with complying with the ACNC and the ACNC's Governance Standards
- registering as a charity with the Office of Fair Trading (OFT)
- registering as an incorporated association | advice regarding compliance with the Associations Incorporation Act 1981 (Qld)
- unincorporated associations advice
- Constitution review, advice and preparation
- advice re Charities law
- Not-for-Profit legal advice
- fundraising advice
Some of the corporate law matters we have assisted our clients with include:
- reviewing and amending a constitution for a charitable organisation - to ensure compliance with the Corporations Act 2001 (Cth), Australian Charities and Not-for-profits Commission Act 2012 (Cth); and Australian Charities and Not-for-profits Commission (ACNC) Governance Standards;
- succession planning advice for a client with a number or companies and trusts;
- providing advice and assistance for a corporate client in regards to protecting their intellectual property rights in Australia and internationally;
- advising and drafting a Distribution Agreement for an Australian manufacturer engaging a distributor in New Zealand;
- drafting various contractual documents for an Australian manufacturer, such as:- licensing agreements, confidentiality agreements; and deeds of indemnity & release.
What is Corporate Law?
As a general statement, corporate law is the body of laws, rules, regulations and practices that govern the formation and operation of companies. Although, in practice it can have a wider application to other organisations, such as associations and charities.
Types of Companies
There are two main types of companies in Australia:
- private (proprietary); and
The Corporations Act 2001 (Cth) defines a proprietary company:
- a company that is registered under the Act;
- has at least 1 x director whom ordinarily resides in Australia (See section 201A(1) of the Corporations Act 2001);
- does not need a secretary (See section 204A(1) of the Corporations Act 2001);
- at least 1 x shareholder (See section 114 of the Corporations Act 2001);
- no more than 50 non-employee shareholders (See section 113(1) of the Corporations Act 2001;
- is limited by shares (or an unlimited company with a share capital) (See section 112(1) of the Corporations Act 2001).
A proprietary company is also either a:
The thresholds that define a large proprietary company increase on
1 July 2019
A company is a Small proprietary company if it satisfies 2 of the below:
- consolidated revenue of less than $50 million;
- consolidated gross assets of less than $25 million;
- fewer than 100 employees.
A company is a Large proprietary company if it satisfies 2 of the below:
- consolidated revenue of $50 million or more;
- consolidated gross assets of $25 million or more;
- 100 employees or more.
An advantage of being a Small proprietary company is that the company has less reporting obligations and regulatory compliance requirements than a Large proprietary company.
Proprietary companies also have the following general characteristics:
- Each shareholder contributes capital to the company by subscribing and paying for shares;
- The liability of each shareholder is limited;
- The company cannot conduct public fundraising activities (eg. to investors) that needs a prospectus. (See section 113(3) of the Corporations Act 2001);
- A proprietary company can generally be identified by the company name ending with the words 'proprietary limited' or the abbreviation "Pty Ltd";
- Generally, the Directors have a discretion over which members can acquire a shareholding in the company. (See section 1072G of the Corporations Act 2001).
Under the Corporations Act 2001 (Cth) a public company:
- must be registered under the Act;
- must have at least 3 x directors (See section 201A(2) of the Corporations Act 2001) - two of which must ordinarily reside in Australia;
- must have at least 1 x secretary that ordinarily resides in Australia (See section 204A(2) of the Corporations Act 2001);
- must appoint an Auditor (See section 327A of the Corporations Act 2001).
Public companies also come in four distinct types:
- Limited by shares ;
- Limited by guarantee;
- Unlimited with share capital; and
- No liability company.
(See section 112(1) of the Corporations Act 2001).
Public companies also have the following general characteristics:
- public companies are subject to more regulation than proprietary companies;
- they have an unlimited membership;
- can raise capital by issuing shares to the public;
- a public company may or may not be listed on the Australian Stock Exchange;
- public companies are required to lodge their annual accounts with the ASIC.
Limited by guarantee
A company limited by guarantee has the following typical characteristics:
- often used by not-for-profit and charitable organisations;
- have at least 3 x directors;
- have at least 1 x secretary;
- have at least 1 x member;
- liability of members is limited to the amount they agree to contribute if the company is wound up. This amount is usually a nominal amount;
- operate under a Constitution (unless the 'replaceable rules' as per the Corporations Act 2001 (Cth) apply;
- the company does not issue shares (accordingly, no person can acquire a controlling interest in the company)
If the company limited by guarantee operates as a charity, it may be subject to the requirements under the:
- Australian Charities and Not-for-profits Commission Act 2012 (Cth); and
- Australian Charities and Not-for-profits Commission (ACNC) Governance Standards
No liability company
They are specialty type of company thatcan only be used where the principal activity of the company is that of mining or oil exploration.
The main advantage in adopting a company "limited by shares"structure is the shareholder’s ability to limit their liability to the amount which remains unpaid on their respective shares. This means, (subject to all statutory obligations and other matters of law being complied with) in the event the company experiences financial difficulty resulting in it being wound up, each shareholder’s loss or risk is limited to the amount which remains unpaid on their shares.
Unlimited with a Share Capital
Unlimited with a share capital means there is no limit on the personal liability of the shareholders. That is, shareholders could be liable for the debts of the company even if they have paid for their shares in full. This "unlimited" liability is the main reason why companies often have limited liability (eg. Pty Ltd).
Why Use a Company ?
Companies are a common vehicle for conducting business in Australia. This is primarily due to:
- the limited liability protection companies can offer (arising from the fact that a company is treated as a distinct legal entity separate from its shareholders/members and officers); and
- the ability to be taxed at the company tax rate, which is generally lower than the marginal tax rate which applies to individuals.
But, operating a business through a company does have more stringent legal compliance hurdles to navigate than does a sole business owner or partnership.
Companies in Australia are regulated through an independent Commonwealth Government body called the Australian Securities & Investments Commission (ASIC).
ASIC regulates companies and businesses through various pieces of legislation, including the Corporations Act 2001 (Cth) and Business Names Registration Act 2011 (Cth).
Companies can be registered by applying in the prescribed form to ASIC. Upon registration, a company is issued an Australian Company Number (ACN) and a certificate of registration is issued.
The Corporate Key is a security device issued by ASIC once as company is registered. The key is a uniquenumber designed to make dealings with ASIC more secure. Any dealings with ASIC require this number to be quoted.
Separate Legal Entity
A company is a separate legal entity distinct from its directors and shareholders. As such, it can continue to survive even where there is a change in directorship or shareholding. The company is said to have perpetual succession.
As a separate legal entity, the company has powers like a person. It can own and dispose of property and other assets and will be able to contract, sue and be sued in its own right.
Company’s Constitution and Replaceable Rules
A company’s constitution sets out certain powers and duties with respect to the internal management of the company.
However, a company can elect for its internal management to be governed by the replaceable rules contained in the Corporations Act 2001 (Cth).
Directors manage the business and other affairs of a company.
There are numerous obligations imposed on directors of companies as set out in the Corporations Act 2001 (Cth). Such obligations include, among others:
- act honestly
- make sure the company pay its debts when due
- keep proper financial records
- act in the company’s best interests
- not be bankrupt
- act with due care and diligence
- not to use their position or information obtained through their position improperly
Shareholder (or Members)
The shareholders represent the ownership of the company. Shareholders are not liable for the company's debts per se. In terms of proprietary limited companies, generally the only financial obligation as a shareholder is to pay the company any amount which remains unpaid on their shares.
Advantages of Companies
There are a number of liability protection and taxation advantages of using a proprietary limited company in business. For example:
- limited liability for the shareholders;
- if the company has paid tax, then the shareholders will get a credit for that tax paid;
- contributions made by the company to a superannuation fund on behalf of employees may be claimed by the company as a tax deduction;
- losses can be transferred from one company in the group to another;
the company tax rate of 30% is lower than the highest marginal tax rate for individuals.
Disadvantages of Companies
There are a various disadvantages in using a company. For example:
- highly regulated;
- greater regulation means more compliance costs;
- the administrative costs of a company are likely more expensive than say a sole proprietorship or partnership structure;
- limited liability protection as a company is diluted when directors have to provide personal guarantees.