Australia has maintained a reputation of being a great place to do business. As such, Australia has attracted and continues to attract a great deal of foreign investment. For companies looking to setup operations in Australia, with long term goals in mind, there are a number of entities available that can be selected. INS Global has the expertise and experience to advise you on which entity will best suit your business needs.
Types of Entities Available in Australia
There are various types of entities available for an enterprise to choose from. Companies which have been incorporated outside of Australia, but intend to operate in Australia need to incorporate a wholly or partially owned entity, or register a branch office. Foreign persons wishing to conduct business in Australia can do so as a sole proprietor, through a partnership or joint venture, through a trust, as a corporation or operate as a branch.
A proprietary company can be described as a limited liability company (LLC) and is the most common type of business entity in Australia. This type of entity is made for companies with 50 shareholders or less. This is the most selected type of entity as it is much more simple and cost effective to open and administer, as opposed to a public company. Companies incorporated in Australia are given a unique Australian Company Number (ACN).
- Must have between 1 and 50 shareholders;
- Must have at least 1 Australian resident as a Shareholder;
- Does not require a company secretary;
- The name of the enterprise must include “Proprietary Limited” (or “Pty Ltd”), if it is a limited proprietary enterprise;
A proprietary company can be classified as either a large proprietary company or a small proprietary company. A proprietary company is considered a large proprietary company if it meets 2 of the following requirements:
- Revenue – The consolidated revenue of an enterprise and any entity it may control is $25 million or more, for a financial year;
- Assets – The value of the consolidated assets (gross) of an enterprise is $12.5 million or more, for a financial year;
- Number of employees – An enterprise has 50 or more employees, at the end of a financial year.
This type of entity is for larger enterprises who wish to operate in Australia. The functions of a public company are similar to that of a proprietary company, however there is minimum capital investment required. A public company also has additional benefits such as, no limit being placed on the amount of shareholders in a company and no there is no limit on the amount of funds a company is able to raise, as long as it satisfies the applicable disclosure regulations.
- There is no limit on the amount of shareholders;
- The enterprise must have at least 3 directors, of which 2 must be persons who ordinarily reside in Australia;
- It can be listed on the Australian Securities Exchange;
- The name of the enterprise must include the words “Limited” or “Ltd”.
Foreign companies are able to operate in Australia through a branch office. A branch office does not serve as its own legal entity, however if a company chooses to operate through this means, it must be registered as a foreign company wanting to do business in Australia, under the Corporations act. In order to be recognized as a foreign company, it must be registered with the Australian Securities and Investments Commission (ASIC). Thereafter, an enterprise must establish a registered office and a local agent needs to be appointed.
Process of incorporating a company in Australia
The following process should be followed in order to incorporate a company in Australia:
- Name – A business name must be chosen for the company that intends on being incorporated in Australia. The name must be acceptable and available in order to be registered with ASIC.
- Application – The enterprise must then lodge their application with ASIC, who will register the enterprise if the name is acceptable and available.
- ABN and Tax number – once an enterprise has been registered it must then apply for an Australian Business Number (ABN) and a Tax File Number (TFN).
Once a company has been incorporated the company will need to:
- Company register – A company is required to maintain a company register which contains information on the enterprise and records minutes of all directors’ meetings.
- Solvency declaration – The company will be required to make a solvency declaration on an annual basis.
- Financial statements – For large enterprises or companies wholly owned by a foreign entity, they will be required to keep audited financial statements of each financial year.
Changes to a Company
The ASIC must be notified if a company decides to make any of the following administrative changes:
- The name of an enterprise;
- Any significant details of an enterprise, such as their registered address;
- Details of directors;
- Share structure;
- A Company’s constitution;