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    Andrew1960
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    When forming a company. What’s the the ‘type’ of equity used To create zero risk. I know you can be a silent partner but is there something different to minimize risk of debts for some investors?

    Regards
    Andrew

    #1220256
    steve201
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    Hi Andrew,

    Generally speaking equity investments attract a variety of risks.

    If you do not wish to be held accountable for business management, then it’s my suggestion you should NOT be an ordinary shareholder, but a preference shareholder.

    Please review the ASIC website on the pros and cons of preference shares as they stand today.

    Thank you.

    #1220257
    James Millar
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    Hey Andrew if you are looking to start a company and asking these questions (which are important questions) then I strongly recommend you seek professional help specific to your circumstances. There are many nuances that can effect tax outcomes significantly so DIY at your own risk.

    Standard proprietary limited companies (PTY LTD) have “limited’ liability to shareholders. This means the exposure of an ordinary shareholder is limited to the amount they invested as equity and they cannot be pursued for further monies as shareholders. The main caveat is if the ordinary shareholder is a holding company in which case there can be some shareholder exposure (but that’s not an issue most cases) for the debts of the company.

    The real exposure comes from being a director of the the company as they can potentially be liable for certain debts of the company AND they can be held accountable under criminal law for crimes committed by the company.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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