Question

Polly Parrot registers a company called Lorikeet Pty Ltd. Polly is the sole shareholder and sole director of Lorikeet Pty Ltd. Lorikeet Pty Ltd does not have a secretary or any other officers or employees and has no assets other than $500 in a bank account. It has no business operations. Which of the following is correct?

	A.	If Lorikeet Pty Ltd does not have a constitution, the replaceable rules apply to Lorikeet Pty Ltd.
	B.	Lorikeet Pty Ltd has violated the Corporations Act (Cth) 2001 as all companies need at least two directors.
	C.	Lorikeet Pty Ltd is a small proprietary company under section 45A(2) of the Corporations Act (Cth) 2001.
	D.	Lorikeet Pty Ltd could raise capital by offering shares or debentures to a large number of people by complying with the fundraising provisions in Ch 6D of the Corporations Act (Cth) 2001.
	E.	Both A and C are correct.

Answer 1

The answer is C.

Lorikeet Pty Ltd is a small proprietary company under section 45A(2) of the Corporations Act (Cth) 2001.

It is a small proprietary company as it has less than $12.5 million in assets and less than $25 million in revenue.

Also, Replaceable rules do not apply to a proprietary company if the same person is the sole director as well as the sole shareholder.

A proprietary company is a small proprietary company for a financial year if it satisfies at least 2 of the following paragraphs:

(a) the consolidated revenue for the financial year of the company and the entities it controls (if any) is less than $25 million

(b) the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is less than $12.5 million

(c) the company and the entities it controls (if any) have fewer than 50