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How many shares do I need to register a company? |
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How many shares do I need to register a company?Australia ranks No. 3 among 181 economies for “ease of
starting a business” according to a summary of a study
entitled, “Doing Business 2009”.
Indeed, it is relatively easy for anyone to set up a new company in
Australia. Registration can be completed online and in as
early as one day. Other business requirements such as
business name registration and goods and services tax registration may
also be completed online.
Existing corporation laws make it possible to register a company
quickly. Unlike most countries, Australian law does not
require a new company to have a constitution or a set of articles for
its incorporation. Corporate seals for Australian companies
are also optional now.
In other countries, regulatory agencies usually require incorporators
of new companies to come up with a minimum amount to support an
application for registration. This amount is divided into
shares and must be verified by means of a bank certificate stating that
the minimum paid-up capital is in deposit.
In Australia, however, this is not the case. Australian start-up
businesses are not unduly burdened by strict minimum capital
requirements.
Australian corporation law does not specify how many shares a
proprietary company must have nor how many shares each shareholder must
own or hold in his name. The only
requirement is for a proprietary company to have at least one
shareholder.
In the Form 201 to be submitted to the Australian Securities and
Investments Commission, the applicant for company registration must
also include a list of its shareholders and their respective
shareholdings. A breakdown of the amounts paid and owed from each
shareholder must also be indicated. There may be no minimum
amounts required, but it is a practical measure for you to raise an
amount that is sufficient for your company’s operations.
Once your shareholdings and those of your other shareholders are stated
in the registration form, the same shall form part of your
company’s details. Any changes therein will have to
be reported within twenty-eight (28) days under pain of
penalty. Furthermore, since your liability for your
company’s obligations is limited by the value of your shares,
you will have to keep all information about the status of your
shareholdings current.
Another point to consider is how much capital you should be able to
show to prospective business contacts. It is a fact that new
clients normally consider the shareholder base of a company in
assessing its stability. Meager capital resources may put
your company at a disadvantage. Other companies also maintain
minimum standards when dealing with new companies. They may
consider capital size as a prerequisite for entering into business
contracts with you.
Determining just how many shares should be issued and how much capital
should be infused is a business decision for you to make. The
right value should be an amount that is realistic to your shareholders,
sufficient for your operations and acceptable to your clients.
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