Professional Documents
Culture Documents
Introduction
Characteristics of a company
Legal personality
Limited liability Ownership by share
Perpetual succession
Ability to raise capital Professional management
Types of companies
Size of Ownership
Mode of participation Extend of liability
The public company The proprietary company The share company The guarantee company Limited liability No liability Unlimited liability
Types of companies
Guarantee company are public companies limited by guarantee. They are formed mainly for charitable purposes for community service, rather than with profit-making objectives. They do not issue shares and have no capital as such, for they rely for finance on donations, grants and fundraising activities. Guarantee companies are also used for professional associations, for example, CPA Australia. The members of such companies are not shareholders, nor do they expect distributions from the company. The financial involvement is confined to a contingent arrangement. In the event of the company being liquidated and being unable to pay all its debts, each member undertakes to pay up to an agreed sum to meet the shortfall on liquidation. The member is thus a guarantor, in a fixed amount, of the companys indebtedness, and this guarantee, like the share, defines the maximum liability that the member can incur.
Types of companies
No liability companies are confined to the mining sector of the economy and must be public companies with a share capital. A shareholders commitment to the company does not exceed that amount already paid for the shares. Even if the shares are issued payable in installments, the shareholder is not obliged to make any further payments. If a shareholder does not decide to pay a call, the share are withdrawn and must be sold at public auction. Thus the cost of non-payment is forfeiture of the shares and related to ownership rights. There is no liability in the event of liquidation. The company name of a no liability company must includes the word No Liability or the abbreviation NL.
Accounting standards -Standards made by the accounting professional body that are used as the main
basis of accounting rules on recording data and produce reports.
Presentation vs disclosure
The term disclosure means nothing more than that information is included in the financial report, either in one of the financial statements or in the notes. Presentation is concerned with how the information is disclosed
Directors declaration
The directors must declare:
that the financial statements and notes comply with accounting standards the financial statements & notes give a true and fair view whether, in their opinion, there are reasonable ground to believe that the entity will be able to pay its debts and when they become due and payable; whether, in their opinion, the financial statements and notes comply with the law
Auditors report
Report to members whether or not, in the auditors opinion, the financial report: Is in accordance with the Act Is in accordance with accounting standards Gives a true and fair view
And if not, the auditor must say why