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.
What is a Proprietary Limited company?
A proprietary limited company is a company where shares between the owners limit the ownership, or there are no more than 50 non-employee shareholders. A proprietary limited company is defined under section 45A of the Corporations Act 2001 (Cth)). 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 them when structured as a private company. If a company restructures and becomes publicly listed (usually 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), they can no longer call themselves a Pty Ltd company.
The advantage of being a Pty Ltd is that your regulatory burden is a lot lower than for a public company. In particular, the reports you need to give to regulators and shareholders each year are much more limited, and public disclosure is also limited, meaning a Pty Ltd is 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” if you prefer. However, remember, if you want to use “My Company”, strictly you should register that as a business name.
If you have any questions about registering a private or proprietary company, get in touch with LegalVision. Our company lawyers can assist you with business structuring. Call us on 1300 544 755 or contact us on this page.