What is a company?

Persons engaged in business have a choice as to how they will establish their business. Options include carrying on business as a sole trader, in partnership or as a company. A company is essentially a mechanism to create a separate legal entity to carry on business.

Every company has certain basic elements:

• a name

• a constitution which largely governs the internal workings of the company. The constitution can be either the standard constitution set out in the first schedule of the Company Act or a specific constitution for a particular company. If a company’s constitution differs from standard constitution a copy of the specific constitution must be filed along with the application to incorporate that is submitted to the Companies Office

• at least one issued share and one shareholder

• at least one director

• address details (physical and postal)

A company may have limited (most common) or unlimited liability (see later for more information). A company comes into existence after it is incorporated under the Act. Once incorporated it is recognised in law as an independent legal entity (a Body Corporate). This means it is treated as being a separate “person” from its directors and shareholders. It can, therefore, do many of the same things as a natural person – e.g. hold property in its own name, enter contracts, sue and be sued, etc.