Australia

Posted in Go Offshore Jurisdictions

AustraliaIntroduction

Apart from the business forms described below, other types of organisation in Australia include sole traders; trusts; unlimited companies; charitable or not-for-profit organisations, generally registered as public companies limited by guarantee; special purpose vehicles, particularly superannuation trustee companies; and public authorities.

If the business structure chosen is as a sole trader, a partnership or a trust (i.e. not as a company), the business name must be registered in the state or territory in which it will operate. A business name does not need to be registered if the business is to be conducted under the first name and surname of a person, or their partner.

If it is planned to set up a business in more than one state, the business name must be registered separately in each state.

A business name has no legal status. Registration of a business name does not create a legal entity (only registering a company creates a legal entity).

An Australian business number (ABN) and tax file number (TFN) should be obtained from the Australian Taxation Office (ATO). The business must register for goods and services tax (GST) if turnover is above a certain threshold, and for pay-as-you-go (PAYG) withholding if the business has employees.


Australia Private Limited Liability Company

A limited company in Australia is normally a “proprietary company” or “Pty”; these are divided between the Large Pty and the Small Pty. It must register with the Australian Securities & Investment Commission (ASIC) and obtain a nine-digit Australian Company Number (ACN). It can then pursue its chosen activity throughout Australia, without needing to register in individual states.

There is no minimum share capital. There is no necessity to specify authorised and paid-up share capital.

A Pty must have at least one director, who must ordinarily reside in Australia. There is no requirement for a board of directors, or a supervisory council.

A Large Pty is a limited company that cannot satisfy at least two of the following conditions:

  • the consolidated revenue of the company is less than AUD25m;
  • the value of the consolidated gross assets of the company is less than AUD12.5m; and
  • the company and its subsidiaries together have fewer than 50 employees at the end of the financial year.

In the case of a Large Pty or a Small Pty controlled by foreign entities, the Pty must provide an auditor’s report to the ASIC, together with their written financial statements and directors’ report, for each financial year.

Documents needing to be filed with the ASIC on registration include:

  • an application to register, with the prescribed fee;
  • the proposed company name (if the company does not have a proposed company name, the name on registration will be its ACN);
  • the class and type of company;
  • the registered and principal business office details;
  • director and secretary details; and
  • share structure and members’ share details.


Australia Public Limited Liability Company

A Public Limited Liability Company is a Pty with more than 50 non-employee shareholders and whose shares are available to the public by being listed on a financial market. It must have at least three directors and at least one secretary. At least two of the directors and one secretary must ordinarily reside in Australia.

There is no minimum share capital for public companies. There is no necessity to specify authorised and paid-up share capital.

Public Limited Liability Companies must provide an auditor’s report to ASIC, together with their written financial statements and directors’ report, for each financial year.

Documents needing to be filed with the ASIC on registration include:

  • an application to register, with the prescribed fee;
  • the proposed company name (if the company does not have a proposed company name, the name on registration will be its ACN);
  • a copy of the company’s written constitution (or combination of the official replaceable rules and constitution);
  • the class and type of company;
  • the registered and principal business office details;
  • director and secretary details; and
  • share structure and members’ share details.

Australia Partnership

Partnerships do not have limited liability and do not have a legal “personality” in their own right. For a partnership to exist, under the Partnership Act, four main criteria must be satisfied:

  • a valid agreement (not necessarily written) between the parties;
  • the intent to carry on a business;
  • ownership in common (with some mutuality of rights, interests and obligations;
  • the intent to make a profit (thus charitable organisations cannot be partnerships).
Partners are advised to draw up a partnership agreement at the start of the venture, outlining matters such as the procedure to be followed in the event of either a partner’s death or a dispute, the contributions made by each partner, and the way in which the profits and losses of the partnership are to be dealt with, amongst other issues.

Partnerships can be formed of general partners with unlimited liability, or limited partners, or a mixture of both. Limited Partnerships are formed when registered under Part III of the Act. The paramount characteristic of such a partnership is that the limited partners’ liability will be limited to the amount shown in the Register of Limited Partnerships. Limited partners cannot take part in the management of the Limited Partnership or they will be liable as general partners.

An application for registration as a Limited Partnership is made by lodging a statement signed by each partner, which should include the firm’s name, its registered address, the name and address of each partner, and their individual contributions.

Australia Branches and Representative Offices

Branches and Representative Offices exist, but do not have legal personality. However, foreign businesses that are registered abroad and want to pursue an activity as a “foreign company” (whether incorporated or unincorporated in Australia) must be registered under the Corporations Act.

Foreign companies are registered by a form submitted to the ASIC, accompanied by:

  • a certified copy of a current certificate or registration (or a document of similar effect that confirms that the company is currently registered in its current place of incorporation);
  • a certified copy of the company’s constitution;
  • a memorandum of appointment of a local agent or power of attorney in the agent’s favour;
  • notices of any charges over any property in Australia;
  • a memorandum stating the powers of its directors in Australia; and
  • payment of the appropriate fee.

Names containing restricted words, such as “Bank”, “Insurance”, and “Trust”, will not be permitted unless an appropriate national operating licence has been obtained by the company.

A financial statement must be submitted every year.

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