Companies have to obey all the rules of the Companies Act, which is a long and complicated set of laws. On 1 May 2011 the Companies Act, 2008 became the new set of regulating laws. Up to that date the Companies Act 1973 was enforced. Existing companies are subject to the transitional measures as defined in the new Act.

If more than 10 people want to start a business together, they will have to go to an attorney or an accountant to form a partnership or a company. The usual way to start a company is to buy a shelf company. These are companies that are already formed. A company has shareholders and directors. Shareholders can be people or other companies or Trusts or CC’s. Shareholders put the money into the business and are the owners of the business. Directors are the managers of the business. Sometimes the owners and the managers are the same people and sometimes they are different people.

The law sees a company as separate from its shareholders and directors. This means that like a CC, the assets and debts of the business belong to the company and the assets and debts of the shareholders and directors have nothing to do with the Company.

Suppliers or banks, which lend money to companies will often ask the shareholders or the directors to sign surety for the company. If the company cannot pay its debts, then the people who have signed surety will have to pay the company’s debts.

Directors and shareholders of a private company must always write Pty (Ltd) or Pty (new Act) behind the name of the company. If they write the name of the company without writing Pty (Ltd) or Pty behind it, the law does not see the company as separate from its shareholders, and the debts and assets of the company are not separate from the debts and assets of the shareholders.

If the business is a company and the company has a letterhead, the registration number of the company and all the names of the directors must be printed at the bottom of the letterhead. The registered name and number must also appear on cheques.