Formation and types of companies

Introduction A company is a legal entity, distinct from its creators, members, directors and managers. The separate legal status of the company is discussed in Chapter 3 of this book. For the purposes of this chapter, we emphasise that for a company to come into existence there must be a conferral of that status by the state. Unlike some other forms of association, such as a partnership, it is not legally effective for a group of people to simply declare themselves to be a company. A company is a type of corporation. The corporate status of a company is brought into existence through a process of registration under the Corporations Act . Other types of corporate entities are created by different legislative mechanisms, and we briefly describe some of these later in this chapter. Defining ‘corporation’ A company is a type of corporation. While the focus of this book is on companies, some sections in the Corporations Act refer to ‘corporation’, while others refer to ‘company’. Accordingly, it is useful to focus for a moment on the scope of the term ‘corporation’. Section 57A defines the term ‘corporation’ for the purposes of the Corporations Act (the Act). It does this by specifying, in a non-exhaustive way, four types of entity that fall within the definition, and by excluding others. Once the specific exclusions are noted, the definition of ‘corporation’ in the Act is open-ended. Section 57A(1) and (3) provide that the term ‘corporation’, wherever it is used in the Act, includes (but is not limited to) four types of entity: (1) a company: this is defined in s 9 to mean a company registered under the Corporations Act , and this type of corporation is the focus of this book. For the purposes of the Act, a company is a subset of the broader category of ‘corporation’ (2) any body corporate: this term is not defined comprehensively in the Act; under general law the term ‘body corporate’ refers to ‘any body whatsoever that has corporate personality’ (3) an unincorporated body that may be sue or be sued, or may hold property in the name of its secretary or an office holder of the body (4) an Aboriginal and Torres Strait Islander corporation that is registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth).