Incorporation as a company is mandatory once a business venture, excluding certain professions, involves more than 20 participants. The types of companies are as follows:
" Proprietary company - limited by shares. No more than 50 employee shareholders.
" Proprietary company - unlimited with share capital. Cannot have more than 50 non-employee shareholders.
" Public company, which is:
limited by shares
limited by guarantee
unlimited with share capital
or with no liability (special company for mining purposes)

a) Application form
An application for incorporation must be lodged with the Australian Securities Investment Commission (ASIC). The applicant lodging the form need not be a prospective director, secretary or shareholder.

Generally the information required is as follows: name of business; name and address of each person who consents to become a member, director or company secretary; the address of the company's proposed registered office and proposed principal place of business; number, class, amount of shares and their owners.

b) Constitution
The internal management of the company can be governed by the replaceable rules, as listed in S141 of the Corporations Act, which may be displaced or modified by a Constitution. A Constitution is required for a no liability company, a company limited by guarantee and companies requiring listing on the Australian Stock Exchange.
A public company which adopts a written constitution must lodge a copy of its constitution with ASIC.

c) Consents and agreements
(eg consents to membership, directorships and paying for shares, etc). Other documentation is required according to the type of company formed.

Corporations Act requires a minimum number of 1 share. The Australian Securities Exchange requires a minimum spread of 500 shareholders where the company is to be listed.

Shares are flexible and can be issued with special rights, including preferential rights. Shares may be issued fully paid or partly paid. Shareholders are not liable beyond the amount paid or due to be paid on the shares they hold. Members of a company limited by guarantee are not liable for more than the amount they promise to pay on a winding up.

Public companies:
A minimum of three directors; and at least two directors must reside in Australia and one company secretary who must reside in Australia.

Proprietary companies:
A minimum of one director (who can also be the company secretary and only shareholder) and must reside in Australia. There is no absolute requirement to have a company secretary, but if appointed must reside in Australia.

Formation expenses range from approximately $990 (AUS) up to $1,210 (AUS), depending on the type of company, whether with or without company seal and depending on payment terms.

A fee is payable to ASIC at the time of lodgement of an application to register a company, ranging from $330 (AUS) if the company does not have a share company to $400 (AUS) where there is a share capital. This fee is included in the above range of formation expenses.

Generally the following documents must be filed annually (except for small proprietary companies):

• financial report including financial statements, disclosures and notes, and directors' declaration of solvency
• directors report (if auditor appointed).
• auditor's report (if an auditor is appointed)

Half-yearly reports disclosure is also required to overseas and Australian stock exchange (where applicable).

A 'small proprietary company' is a company that meets two or more of the following criteria:

• less than $10m (AUS) revenue,
• less than $5m (AUS) gross assets, and
• less than 50 employees.