Australian Company Structures: A Guide for Directors

Organisations in Australia operate under different legal structures, each with its own rules for governance, reporting, director duties, and liability. The structure an organisation chooses affects everything from how it raises money to what it must report to regulators.

The main categories are private companies, public companies, not-for-profit structures, and government entities. The Corporations Act 2001 governs most company structures at the federal level, while incorporated associations are regulated by state and territory legislation.

Not-for-profit structures

Not-for-profit (NFP) organisations exist to pursue charitable, social, educational, religious, or community objectives rather than to generate profits for owners or shareholders. The two most common NFP structures in Australia are companies limited by guarantee and incorporated associations.

Companies limited by guarantee

A company limited by guarantee (CLG) is registered with ASIC under the Corporations Act 2001. Members guarantee a nominal amount (usually $10–$100) towards the company’s debts if it is wound up, but they do not hold shares and do not receive dividends.

CLGs are used by larger NFPs, industry bodies, and charities that operate nationally or need the legal recognition that comes with federal registration. They must comply with the Corporations Act’s requirements for directors’ duties, financial reporting, and annual reviews. If they are also registered charities, they report to the ACNC rather than ASIC for most reporting obligations.

Examples include large charities, peak industry bodies, and professional associations.

Incorporated associations

Incorporated associations are registered under state or territory legislation — for example, the Associations Incorporation Act 2009 (NSW), the Associations Incorporation Reform Act 2012 (Vic), or equivalent legislation in other states and territories.

This is the most common structure for smaller NFPs: community groups, sporting clubs, parent associations, and local charities. Incorporation gives the association a legal identity separate from its members, which means the association (not individual members) holds property, enters contracts, and can sue or be sued.

The rules vary by state. Reporting requirements are generally lighter than for companies limited by guarantee, but committee members (the equivalent of directors) still have duties of care, good faith, and avoidance of conflicts of interest.

Indigenous corporations

Indigenous corporations are registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) and regulated by the Office of the Registrar of Indigenous Corporations (ORIC). The CATSI Act is based on the Corporations Act but adapted for the specific governance needs of Aboriginal and Torres Strait Islander organisations.

Private companies

Proprietary companies (Pty Ltd)

The proprietary company is the most common business structure in Australia. A Pty Ltd company can have no more than 50 non-employee shareholders, cannot raise money from the public, and restricts the transfer of shares.

Proprietary companies are classified by size:

Small proprietary companies meet at least two of three criteria: consolidated revenue under $50 million, consolidated gross assets under $25 million, and fewer than 100 employees. Small proprietary companies have reduced reporting obligations — they generally do not need to prepare audited financial reports unless directed to by ASIC or required by their constitution.

Large proprietary companies exceed at least two of the three thresholds above. They must prepare and lodge audited financial reports with ASIC annually, similar to public companies.

Public companies

Public companies can raise money from the public and have no limit on the number of shareholders. They face the most extensive governance and reporting requirements.

Listed public companies

Listed companies trade on the Australian Securities Exchange (ASX) and must comply with both the Corporations Act and the ASX Listing Rules. They are also expected to report against the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations on an “if not, why not” basis.

Listed companies must have at least three directors, with a majority being independent non-executives. They must have an audit committee, lodge half-yearly and annual financial reports, and comply with continuous disclosure obligations.

Unlisted public companies

Unlisted public companies are registered as public companies but are not listed on any stock exchange. They must still comply with the Corporations Act’s requirements for public companies, including annual financial reporting and AGM requirements, but do not need to meet ASX Listing Rules.

Government entities

Government entities include Commonwealth-owned corporations (such as Australia Post and NBN Co), which are governed by the Corporations Act and specific enabling legislation, federal government departments, which operate under the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and state and territory government entities, which operate under their respective public finance and governance legislation.

Choosing the right structure

The right structure depends on the organisation’s purpose, how it intends to raise funds, the level of liability protection needed, and the regulatory burden it is willing to accept.

For most community organisations and small charities, an incorporated association is the simplest and least expensive option. For larger NFPs that operate across state borders or need the credibility of federal registration, a company limited by guarantee is more appropriate. For-profit ventures typically choose a proprietary company structure, moving to a public company if they plan to raise capital from the public or list on the ASX.

The AICD’s guide to organisation structures provides a useful overview of the governance implications of each structure.

Related Terms

Governance

Bylaws

Board of Directors

Committee

Body Corporate

Additional Resources

AICD Organisation Definitions

ACNC Charity Structure Guide

Legal Obligations of NFP Directors