Setting up a Business in Australia

A person can conduct business in Australia as a sole trader, in partnership, through a Trust or a joint venture, or as a corporation.

Most foreign companies conduct their business in Australia through a wholly or partly owned subsidiary company incorporated in Australia or through an Australian branch, i.e. the foreign company is registered in Australia as such.

Shelfcom is Australia’s company formation specialists and has incorporated and formed almost 17,000 companies and trusts since 1991. Most of our domestic clients are accounting and legal firms setting up companies for their own clients but we do establish Companies and Trusts for clients who come direct to us.

As a result of our Managing Director’s offshore experience Shelfcom has established a reputation for its incorporation, registration and administration of Australian companies and registered foreign companies for overseas clients. In fact many Australian domestic incorporators being in effect our competitors refer enquiries for such services to us.

We provide the following business support services:

Australian Companies

Companies in Australia are incorporated (registered) under the Corporations Act, 2001. The Act is overseen and administered by the Australian Securities & Investments Commission (“ASIC”).

An Australian company is usually incorporated as either a Public Company or as a Proprietary Company. (There are also specialist companies within these two categories such as companies limited by guarantee for clubs, associations and charities, no liability companies for mining companies and legal, accounting and medical practice companies).

Shelfcom is able to provide all such companies.

These are the most common type of business structure used by small business in Australia.
Their features are:
- They must have the word “Proprietary” or more commonly “Pty” in their name (eg ABC Pty Limited)
- They are used for private ventures and family companies or as subsidiaries of public companies
- Their shareholders are limited to a maximum of 50 non-employee members. The minimum is 1
- The transferability of its shares are limited
- They must have at least one adult director. If only one director is appointed that person must be an Australian resident. All other directors may be non-resident. Only a living person can be a director, corporations cannot.
- They cannot engage in fundraising activities that would require the lodgement with the ASIC of a prospectus or other disclosure document.
- They may be classified as a small or large proprietary company depending on certain criteria.

• Public Companies

- They are used for larger public ventures
- They have a requirement for a minimum of 1 member but the maximum is unlimited
- The transferability of its shares must be unlimited
- They must have at least 3 directors, at least 2 of whom must be residents of Australia
- Subject to applicable laws, they may issue a prospectus for the offer of securities
- They can list on the ASX

• Australian Branch

  An overseas company may register itself in Australia to operate as a branch, in lieu of incorporating a wholly owned Australian subsidiary. To do so various application forms need to be lodged with ASIC and annexed to them must be certified copies of the company’s current certificate of incorporation and other prescribed documents.

  The company must also formally establish a registered office in Australia and appoint a local resident agent.

  The company must file with the ASIC each year its annual accounts and comply with other reporting requirements, such as changes in its directors and registered office in the company of incorporation.

Company and Business Names

A formal register of company and business names is maintained by ASIC. The only restraints on the adoption of a name are that it must be unique and based on the legal principles codified in the Trade Practices Act in the area of “misleading and deceptive conduct”, “misrepresentation” and “passing off”. Companies incorporated in Australia will be issued with a unique nine-digit Australian Company Number (ACN). The branches of foreign companies are identified by its (ARBN).

All companies registered under the Corporations Act are entitled to an Australian Business Number (ABN) which a company will need to register for the Goods and Services Tax (GST).

If a company wishes to trade using another name (ie, other than its registered company name) then the trading name must be registered as a business name. Business name registration is obtained under each State or Territory legislation, and must be registered in each State and Territory in which the company intends doing business under the business name.

Constitution of a Company

The activities of a company are carried out by the persons responsible for the management and control of the activities of the company. Such powers are normally divided between the directors on the one hand and the shareholders on the other hand. The way in which the power is shared between these two groups is determined by the terms of the company’s constituent documents, namely it’s Constitution. The Constitution sets out the company’s name, the terms of the liability of its members and the regulations under which the company is to be internally regulated. Under the Companies Act a company is not required to have a Constitution and may rely on the so called “Replaceable Rules” as set out in the Act. Shelfcom however recommends that all companies adopt a Constitution and supplies such a document for the companies it incorporates.

Directors and Secretary

The Directors of a company have the responsibility for the day to day management of its affairs. A public company must have at least 3 Directors and a proprietary company, at least 1 Director.

In the case of a public company at least 2 of the Directors must be Australian residents and a proprietary company must have at least 1 Australian resident Director. In order to qualify as a resident it is not necessary for the person to be an Australian citizen.

Under the Corporations Act, a proprietary company is not required to have a secretary. If the company chooses to have one or more secretaries, at least 1 secretary must be an Australian resident. Shelfcom recommends and automatically appoints a company secretary when incorporating client companies.

A public company must have at least 1 secretary, and at least 1 secretary must be an Australian resident.

Every company carrying on business or deriving property income in Australia must also appoint a Public Officer who is a resident of Australia. The Public Officer is responsible for the doing of all things which are required of a company under Australian income tax legislation.

Registered Office and Principal Place of Business

A company must have a registered office and principal place of business in Australia. They can be the same address or they may be different. The registered office is the official address for service of process etc, the principal place of business is the address where the business is physically carried out.

Auditors

All public companies must appoint an Auditor within one month of the date of incorporation. All public companies and large proprietary companies are required to prepare an annual financial report which must be audited. Small proprietary companies which are foreign controlled are also required to prepare an annual financial report which must be audited. ASIC will, in certain cases, grant relief from this requirement to large proprietary companies in which a foreign company has an interest or to small proprietary companies controlled by foreign companies.

Books, Accounts, Registers and Filing Requirements

The Corporations Act requires companies to maintain various records and registers of their accounting and administrative transactions. It is usually the secretary (if one is appointed) who carries out such tasks.

The Corporations Act also requires certain documents to be filed at ASIC from time to time so that an up-to-date record of the company’s affairs is available for inspection by the public. A public company must prepare and lodge with ASIC annual financial reports. Every company must lodge an Annual Return in which a director or secretary of the company confirms relevant details of the company for the public register including names and addresses of all directors, address of principal place of business and details of shareholders and their shareholdings.

Trusts

Many businesses in Australia are structured in the form of a trading Trust, particularly family businesses.
The Trust, usually a Discretionary Trust (but can be a Unit Trust which is particularly favoured for property development “syndicates”) has as its Trustee, a corporation which is controlled by for example, the parents.
Shelfcom is able to provide such structures and further information can be obtained from Shelfcom’s own website at www.shelfcom.com