Difference between public limited company and private limited company
Table of Contents
Executive Summary
Ted’s Corporate Services is the business run by Ted. He is a sole trader. He wants to convert his business from sole trader to company to take the benefit of limited liability and other benefits as well. He wants advice for forming a company which is the most appropriate for him.
Proprietary company unlimited by shares capital, public company unlimited by shares capital, public company limited by guarantee and public company with no liability are the companies which are not appropriate for Ted. As, the companies have unlimited liabilities which Ted do not want to establish and also no liability company is done for mining purpose only.
Whereby, proprietary company limited by shares and public company limited by shares are the companies which can be set up by Ted. If company can easily get large capital, have good ability to borrow money from public, possibly list on stock exchange then Ted can form the public company limited by shares. Whereas, small business like Ted are unlikely to meet these abilities and want to convert to company. So, the most appropriate type of company Ted could form is proprietary company limited by shares. This can also be converted to public company limited by shares in the future if Ted wants to expand his company.
1. Introduction
Company is defined as a legal entity which is allowed by legislation and permits a group of people to apply to the government for an independent organization as shareholders who can then target on pursuing objectives, and empowered with legal rights (Modern Company Law 1997). Advantages of company are it is a separate legal entity; it can sue and can be sued by others, protection of assets and so on whereas complex legal formalities, more paperwork, costly to run and establish are some of the disadvantages of company (The Advice Spot 2010).
The purpose of writing this report is to advice Ted about forming the company. Also, advising him about
Executive Summary
Ted’s Corporate Services is the business run by Ted. He is a sole trader. He wants to convert his business from sole trader to company to take the benefit of limited liability and other benefits as well. He wants advice for forming a company which is the most appropriate for him.
Proprietary company unlimited by shares capital, public company unlimited by shares capital, public company limited by guarantee and public company with no liability are the companies which are not appropriate for Ted. As, the companies have unlimited liabilities which Ted do not want to establish and also no liability company is done for mining purpose only.
Whereby, proprietary company limited by shares and public company limited by shares are the companies which can be set up by Ted. If company can easily get large capital, have good ability to borrow money from public, possibly list on stock exchange then Ted can form the public company limited by shares. Whereas, small business like Ted are unlikely to meet these abilities and want to convert to company. So, the most appropriate type of company Ted could form is proprietary company limited by shares. This can also be converted to public company limited by shares in the future if Ted wants to expand his company.
1. Introduction
Company is defined as a legal entity which is allowed by legislation and permits a group of people to apply to the government for an independent organization as shareholders who can then target on pursuing objectives, and empowered with legal rights (Modern Company Law 1997). Advantages of company are it is a separate legal entity; it can sue and can be sued by others, protection of assets and so on whereas complex legal formalities, more paperwork, costly to run and establish are some of the disadvantages of company (The Advice Spot 2010).
The purpose of writing this report is to advice Ted about forming the company. Also, advising him about
References: Adams, M, 2002, Essential Corporate Law, 1st edn, London Commonwealth Consolidated Act, 2001, Corporation Act 2001, viewed 30 April 2012, Davies, P 1997, Gower’s Principles of Modern Company Law, 6th edn, London Finance, 2007, Proprietary limited company, viewed 30 April 2012, Lipton, P, Herzberg, A, 2000, Understanding Company Law, 10th edn, Sydney, New South Wales Lipton, P, Herzberg, A, 2001, Understanding Company Law, 9th edn, Sydney, New South Wales Lipton, P, Herzberg, A, Welsh, M, 2010, Understanding Company Law, 15th edn, Sydney, New South Wales Sections