Definition of Pty Ltd
Pty Ltd is short for ‘Proprietary Limited’. If Pty Ltd appears at the end of a company’s name, then you’re dealing with a private company (one that hasn’t offered its shares to the general public). This article sets out what a proprietary limited company is in Australia.
Definition of a Proprietary Limited Company
A proprietary limited company is a company where shares among the owners limit the ownership, or there are no more than 50 non-employee shareholders. Section 45A of the Corporations Act 2001 (Cth) defines proprietary limited companies. A proprietary limited company must not do anything that would require disclosure to investors under Chapter 6D (except in limited circumstances). This clause refers to not engaging with outside investors outside the 50 non-employee limit.
Many Pty Ltd companies often have few investors other than its founders and a small number of backers at most. While the vast majority of these are small businesses and startups, none of the rules above actually limit the size of the company regarding its assets or turnover. For larger businesses, there is also a curtain of secrecy that is granted to them when structured as a private company. If a company restructures and becomes publicly listed, they can no longer call themselves a Pty Ltd company. This usually happens because they need to raise more money to grow or survive and to do so they need to have more than 50 non-employee shareholders or raise capital.
The advantage of being a Pty Ltd is that your regulatory burden is lower than for a public company. In particular, the reports you need to give to regulators and shareholders each year are much more limited. Public disclosure is also limited, making a Pty Ltd a more “private” company.
Using the ‘Pty Ltd’ Abbreviation
On most legal documents, you need to give your full company name and that includes the Pty Ltd suffix. In addition, under section 144 of the Corporations Act, you must display your name prominently wherever you do business that is open to the public (and that includes the suffix). However, for your day to day trading, for example, you do not have to use the suffix. To do this, you should register your company name without the ending as a business name in itself against your company’s ABN.
Note that under section 165 of the Corporations Act, you have the option of using various abbreviations or using the full words. Relevantly here, you can use ‘Proprietary’ and ‘Pty’ interchangeably, and the same for ‘Limited’ and ‘Ltd’. So if your company is registered as ‘My Company Proprietary Limited’, you can just use ‘My Company Proprietary Ltd’ or ‘My Company Pty Ltd’.
However, remember, if you want to use just ‘My Company’, you should register that as a business name.
Registering a Company
If you are looking to register a company, you need to obtain an Australian Company Number (ACN). This is a different number to an Australian Business Number (ABN). Every company that trades or sells goods or services in Australia must have an Australian Company Number displayed on all company documents. LegalVision can assist you with registering a company in Australia.
Pty Ltd stands for ‘Proprietary Limited’. This is a ‘private’ company that carries a lower regulatory burden than a public company. Private companies also have lower disclosure requirements.
If you have any questions about registering a proprietary company, call LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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