Formation and Incorporation of Companies in Australia

Corporation Law

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Answer 1
Issue
In this case, the key issues are raised relating to formation and incorporation of companies
in Australia such as selecting the name of the corporation, register officer and filling the
registration application. Another issue is whether incorporation of a company will be
beneficial than compared to sole proprietorship?
Type of Corporations
The Corporations Act 2001 (Cth) (the Act) is the key legislation which provides information
regarding incorporation and governance of companies in Australia. Section 112 of the Act
recognises different types of companies which are primarily categorised into two parts –
public and proprietary company (Legislation, 2019). Public corporations are further
categorised into four divisions which include limited by share, unlimited with share capital,
no liability and limited by guarantee. The proprietary companies are categorised into two
types which include limited by shares and unlimited with share capital.
Name of the Corporation
The provisions regarding selection of the name for the corporation is given under section
148 of the Act. Parties can only select an available name for the company. It is mandatory
for public companies to include the word ‘Limited’ at the end of their name. In the case of
proprietary companies, the word ‘Proprietary Limited’ is mandatory to be included in the
end. The no liability corporations have to include the word ‘No Liability’ at the end, and
unlimited proprietary companies have to add ‘Proprietary’ in their name (ASIC, 2019a).
Section 147 provides that parties cannot select names which are already selected by other
corporations. Moreover, they cannot select those words which are unacceptable by the ASIC
or governmental authorities. The examples of unacceptable words include federal or
commonwealth. Parties can check National Names Index on the website of ASIC to check
the availability of their name. Furthermore, section 152 provides that people have the right
to reserve a name for a company by filing prescribed form to ASIC (ASIC, 2019a). After filing
the application, the name is reserved for two months which is an obligation imposed on

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ASIC. The party can file another application in order to extend the period of reservation for
further two months.
Registered Office
Section 119A of the ACT provides key policies in relation to jurisdiction for companies for
incorporation. As per this section, a corporation can be incorporated in a particular state or
territory. An application is filed by corporations for registration under section 117 (2) (n) and
601BC (2) (o) (Austlii, 2019). Under the registration certificate, an obligation is imposed on
ASIC to include the name of the territory or state; however, the difference in state or
territory did not affect the legal rights of corporations. In this process, the proposed
addressed which is made by the parties in the registration application become the
permanent address of the company. Usually, parties select a registered office location which
must be close to the place which the corporation manage or conduct its operations.
Displaying the name of the corporation on the location is mandatory as per section 144.
Consent and Share Details
The structure of the company is decided by its members during the registration in which
details regarding the number of shares and directors’ authorities are mentioned. Along with
these details, the information regarding the consent of shareholders, directors and other
members are taken (Business, 2018). While incorporating a proprietary company, the
approval of all members is necessary to be present. Members have to ensure that all these
details are correct and they have to submit these at the date of registration.
Constitution or Replaceable Rules
The Constitution of a company creates a contract between the company and its members,
directors, and secretary. Section 136 provides provisions regarding adoption of the
Constitution which governs the actions of members and directors. In case the company did
not adopt a constitution, then its operations are governed by the replaceable rules which
are given under the Corporations Act (ASIC, 2017). Section 141 provides details regarding
replaceable rules in which principles are included for power, selection and appointment of
board of directors, maintenance of book of accounts and others. In the case of no liability
companies, it is mandatory for them to adopt a Constitution.