A private family company is a normal company that:-
holds income-earning assets (such as a business),
that has shareholders who own the company,
that has directors who manage the company,
that has a Constitution (and preferably a shareholders’ agreement) which set out the rules for running the company,
that distributes profits by paying dividends to shareholders,
It is like a public company except that the majority of shares in a private family company are held by members of the one family and it doesn’t have to deal with as many compliance rules.
There must be a company constitution specifying how the company is to be governed.
There must be either a single shareholder or a number of shareholders.
There must be directors, a company secretary and a public officer, (or there may be a sole director/secretary).
The company must have an ACN, an ABN and probably a TFN.
It should have company capital and may have loans from directors to give it operating capital.
It must have its own bank account.
It must have a company register where you will keep a record of the shareholders, the officeholders, ASIC records, minutes of meetings of shareholders and directors, etc.
It probably should have a shareholders’ agreement or buy/sell agreement.
A private family company provides a means for you to employ family members in your business in a formal corporate legal structure and subject to the laws of corporate governance and regulations applicable to unrelated corporations stop.
Your private family company can employee family members to get them involved in your business in a formal corporate legal structure.
You can arrange for your private family company to issue shares to family members who want to be involved in the business thereby motivating them to stay with the business long-term with a view to one day taking over control.
The assets of your private family company belong to your company, not to you. Therefore you cannot give those assets away in your will. You can however give away your shares in the company and this gives you scope for some creative estate planning.
A shareholder agreement or buy/sell agreement is a way you can lay down some rules for management of the company and give your children and grandchildren some ways of keeping the company tightly held within the family.