By Paul Stasuik
The Global Financial Crisis has changed the way a number of employees now think about, and define, job security. A few have decided to take control of their employment and strike out into the world of business: setting up a new company and working for ‘themselves’.
This month we consider some of the benefits and burdens of registering an incorporated company limited by shares in Australia. It is assumed that the persons have conducted the necessary feasibility studies and created the relevant business plans (more information on these topics can be located at www.business.gov.au/Howtoguides/Pages/default.aspx) prior to considering whether or not incorporating a company is worthwhile in their circumstances.
As each individual’s circumstance is different it is imperative to seek the necessary legal and accounting advice prior to registering a company.
Three main legal issues to be considered are as follows:-
• Protecting the company name;
• Limited liability;
• Transfer of ownership and
control;
Protecting the Company Name
One benefit of registering an incorporated company is that, once registered, another entity is not able to use the same name as your company and legal action may be taken to prevent them from operating under the same name. It is worth noting that as of 28 May 2012 the Australian Security and Investment Commission will maintain a business names registry, which will allow a company to register a business name without the need to separately register in each state and territory that it operates in (for further information see www.asic.gov.au).
Limited Liability
The main benefit of registering an incorporated company is that it has limited liability. The Corporations Act 2001 defines a company limited by shares as a company formed on the principle of having liability of its members limited to the amount (if any) unpaid on the shares respectively held by them.
It is worth noting that a director of a company may be held personally accountable for a whole range of issues that may apply.
Transfer of ownership and Control
The shares of a company may be traded, sold or even new shares issued to either an existing shareholder or a new shareholder, which facilitates changing requirements of the company’s changing business needs. An example of this would be to raise new capital by offering new shares to shareholders instead of borrowing additional funds from a private lender.
If you believe a registered incorporated company limited by shares would suit your present or future business it may be of benefit to contact one of our staff at either our Mackay or Cannonvale offices to discuss the matter, when taking into consideration your personal circumstances.
Given that the PPSR is a completely new system and with the scale of the PPSR, there was bound to be some teething problems.
In the first week of operation, the PPSR experienced several issues relating to security data which was migrated from third party sources such as the Australian Securities and Investments Commission (ASIC)and the States’ Fair Trading Departments. This caused problemsnfor those wanting to conduct
searches of the Register. Somebusers also experienced difficulties in registering new security interests.
At the time of writing, some two weeks since the Register came online, the majority of issues outlined above have been addressed. We are now receiving consistent and reliable search results. Macrossan & Amiet has access to the PPSR via our search agent Citec Confirm. We now have the ability to search the register and release security interests relating to personal property.
If you require a search of the PPSR or your interests in an item of personal property protected, please do not hesitate to contact our office to speak with one of our PPSR experts.
