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CORPORATIONS ACT 2001

CHAPTER 2A - REGISTERING A COMPANY  

PART 2A.1 - WHAT COMPANIES CAN BE REGISTERED  

SECTION 113  PROPRIETARY COMPANIES  

113(1)  [Limitation of non-employee shareholders]  


A company must have no more than 50 non-employee shareholders if it is to:


(a) be registered as a proprietary company; or


(b) change to a proprietary company; or


(c) remain registered as a proprietary company.

Note: Proprietary companies have different financial reporting obligations depending on whether they are small proprietary companies or large proprietary companies (see section 45A and Part 2M.3).

113(2)  [Application of s 113(1)]  


In applying subsection (1):


(a) count joint holders of a particular parcel of shares as 1 person; and


(b) an employee shareholder is:


(i) a shareholder who is an employee of the company or of a subsidiary of the company; or

(ii) a shareholder who was an employee of the company, or of a subsidiary of the company, when they became a shareholder.

113(3)  [Share offers]  


A proprietary company must not engage in any activity that would require disclosure to investors under Chapter 6D, except for an offer of its shares to:


(a) existing shareholders of the company; or


(b) employees of the company or of a subsidiary of the company.

113(3A)  [Strict liability offence]  

 View history reference

An offence based on subsection (3) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

113(4)  [Effect of contravention]  


An act or transaction is not invalid merely because of a contravention of subsection (3).

Note: If a proprietary company contravenes this section, ASIC may require it to change to a public company (see section 165).


 



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