Are Special Purpose Not-For-Profits automatically registered with the ACNC?

Unfortunately, no.  ACNC registration requirements can be somewhat complex. While our special purpose not-for-profit constitutions are suitable for registration with the ACNC, Patricia Holdings does not participate in the registration of your charity beyond registering it with ASIC.

What is the difference between a not-for-profit proprietary limited company and a public company limited by guarantee?

While both company types have been developed for use by not-for-profit entities, there are some distinct differences.

The NFP Pty Ltd Company is mainly used to act as the trustee of either a public or private ancillary fund. It can also be used however for other not-for-profit purposes such as a charity if it chooses to obtain charity status through the ACNC and the ATO. This product establishes a private company limited by shares. Its funding generally comes from shareholders in the form of share capital and less so from the public. As it is registered as an ASIC special purpose company, its assets cannot be distributed to its shareholders at any time.

Public companies limited by guarantee have been developed for use as a not-for-profit organisation usually seeking charity status. This product establishes a public company that is limited by guarantee meaning it does not have share capital. Instead, its funding mainly comes from the public. The liability of members is limited by the members guarantee which is the nominal amount the member agrees to pay in the event that the company is wound up. LBGs are not permitted to make distributions of profits or assets to its members. LBGs can be considered a special purpose not for profit company or not.

Patricia Holdings provides both of these company types with suitable constitutions for each structure. Contact our friendly team today.

What other structures might be suitable for not-for-profit purposes?

There are various types of structures that would also be suitable for not-for-profit purposes. These include public companies limited by guarantee (or LBGs), incorporated associations, or even trusts. Patricia Holdings can help you set up an LBG or a charitable trust at the click of a button. Incorporated associations are set up through the relevant state or territory so it is recommended you do this yourself. For more information about LBG’s, click here. For further info about our charitable trust deeds click here.

Can I use my own constitution to register a Not-For-Profit Pty Ltd with Patricia Holdings?

Of course you can. In order to meet ASIC’s eligibility requirements of a special purpose not-for-profit company and take advantage of the reduced annual review fee, you will need to make sure that the constitution:

- Requires the company to pursue charitable purposes only and to apply its income in promoting those purposes;

- Prohibits the company making distributions to its members and paying fees to its directors; and

- Requires its directors to approve all other payments the company makes to them.

- Specifies that on winding-up, the company must distribute its assets to an entity with similar objectives, and not to the company’s members.

Can the directors of a not-for-profit Company be paid any fees or remuneration for their services?

No they can’t. Per ASIC’s special purpose eligibility requirements, directors cannot be paid fees or remuneration for their services as directors. There is an additional requirement that any expenses incurred in relation to their duties as directors must be approved before any payment is made back to them. The Patricia Holdings constitution has been drafted in a way that satisfies ASIC’s requirements and allows the not-for-profit company to take advantage of the reduced annual review fees each year.

Can the NFP Company’s capital and profits be distributed to the members?

The capital and profits of a not-for-profit company cannot be distributed to the members – this is what makes the company NFP. Capital and income must be applied solely towards the company’s charitable purpose. This should be written in the company’s constitution.

What happens to the assets of a not-for-profit Company on a winding-up?

On winding-up, the assets that are left over after the not-for-profit company has paid its debts must be distributed to another entity with similar objectives to the NFP such as (but not limited to) a charity. Assets cannot be distributed to shareholders at any point.

What is an Ancillary Fund?

The ACNC describes ancillary funds as special funds that provide a link between people who want to give (known as ‘donors’) and organisations that receive tax deductible donations (known as ‘deductible gift recipients’ or DGRs). Ancillary funds are set up for the purpose of providing money, property or benefits to DGRs and are established and maintained under a will or instrument of trust. They are endorsed by the ATO as tax exempt. There are two types of ancillary funds:

  1. Public – also known as PuAFs, seek donations from the public.
  2. Private – also known as PAFs, use donations from business, families and individuals.

The Patricia Holdings NFP Pty Ltd constitution is suitable to use for trustee companies of ancillary funds both public and private.

What makes a Not-For-Profit Pty Ltd company different from a charity?

While a not-for-profit pty ltd company is set up to pursue charitable purposes, this does not mean it is a charity. Charities must be registered with the Australian Charities and Not-for-profits Commission (ACNC) and endorsed by the Australian Taxation Office (ATO) for certain tax concessions. There are further requirements imposed by the ACNC and ATO with regards to the entity’s constitution. If looking to set up a charity, you would need to seek independent legal advice about these requirements and making changes to the company documents provided to you by Patricia Holdings.

What is the point of having share classes?

A company can issue different classes of shares with the rights and restrictions attached to them distinguishing it from other classes. While a NFP company is unable to make distributions to its members (including on winding up), rights relating to receiving notice of, or attending meetings, as well as voting, and any restrictions on the holders of a particular share class, are still relevant.

What makes the company not-for-profit even though the company is limited by shares?

Share capital generally allows a company to distribute profits and dividends to shareholders in proportion to the shares they hold meaning that companies registered with shares are considered a “for-profit” structure.

To be considered a special purpose company and be eligible for the reduced ASIC annual review fees, the constitution of a not-for-profit company must be drafted in a way that excludes the company from making distributions to its members or paying its directors and ensures that the company is used to pursue charitable purposes only. This is what makes it a “not-for-profit”.

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