July 16, 2024
INCORPORATION OF COMPANY IN AUSTRALIA
INCORPORATION OF COMPANY IN AUSTRALIA
Australia is an ideal business destination due to its stable and robust economy, strategic location, and strong trade opportunities. Its consistent economic growth, low inflation, and resilient financial system provides a predictable environment, reducing one’s business risks. Positioned in the Asia-Pacific region, Australia offers access to fast-growing markets like China, Japan, and South Korea, supported by numerous free trade agreements that facilitate easier market access and reduced tariffs. Additionally, the country boasts high-quality infrastructure, a skilled and diverse workforce, and a supportive business environment with transparent regulations and government incentives.
1. CHOOSING A COMPANY NAME
When selecting a name for the company, several considerations are crucial. A company’s name shall be unique and not identical to any existing company or business’s name. To verify name availability, use the name availability search tool provided by the Australian Securities and Investments Commission (“ASIC”). In case, if a company holds an identical name, one might still be able to register it under specific conditions, such as if the individual is a proposed company director or member, or if a company is a proposed member. Before May 2012, multiple businesses with the same name could exist if registered in different states or territories. However, this is no longer permissible under ASIC’s national register.
2. RESTRICTED TERMS AND NAME RESERVATION
Certain words and phrases cannot be used without government approval. These include ‘Bank,’ ‘Trust,’ ‘Royal,’ and ‘Incorporated.’ Additionally, misleading words implying an association with the Australian government, the royal family, or ex-servicemen’s organizations are prohibited.
If someone is not ready to register their company but wants to secure a name, they can apply to reserve it using Form 410. However, it is important to be aware of existing trademarks or names that might cause legal issues. Checking for existing trademarks on the IP Australia website before reserving the name will reduce the risk of rejection. Once the application is approved, ASIC will reserve the name for two months. However, if the applicant wishes to extend this period, an application for reservation can be filed again.
A company’s name must also reflect its legal status.
For example, if a member’s liability is limited to unpaid shares, the name must end with ‘Proprietary Limited.’ If liability is unlimited, the name must end with ‘Proprietary.’
3. COMPANY OPERATION AND GOVERNANCE
Before registering, one must decide on how the company will be governed. Options include:
- Replaceable rules,
- A company constitution, or
- A combination of both.
Replaceable rules which are given in the Corporations Act provide a basic framework for a company’s management. These rules can substitute a written constitution, saving the expense of updates due to legal changes. However, a company can also adopt a written constitution.
Sole director/member proprietary companies have special rules:
- If there’s only one officeholder, replaceable rules or a constitution are not mandatory.
- If another director/member is added, replaceable rules shall be applicable unless a constitution is adopted by them.
A proprietary company can have up to 50 non-employee shareholders and must either be limited by shares or be an unlimited company with share capital. Activities that require investor disclosure are prohibited, and shares can only be offered to company members or employees/subsidiaries.
4. OBLIGATIONS OF OFFICEHOLDERS
Officeholders must understand their legal obligations. Company directors are required to obtain a director identification number (director ID), which remains unique to them indefinitely.
5. CONSENT FROM OFFICEHOLDERS, MEMBERS, AND OCCUPIERS
Before registering, one must obtain consent from officeholders and members, and the owner of the registered office address if the property does not belong to the company (e.g., an accountant’s office). These written permissions should be kept in the company records, alongside an additional register for the purpose of recording members’ detail.
6. REGISTERATION OF A COMPANY
An individual can choose to register his company through a private service provider (PSP), such as an accountant or solicitor, who typically charges fees which are higher than the charges applied by ASIC.
Some company types cannot be registered online and require paper submission. These include:
- Companies with unlimited liability,
- Companies with share values beyond four decimal places,
- Companies limited by shares registering as CCIVs,
- Companies needing to lodge specific forms (207Z, 208, 379),
- Public companies with ACN as the company name governed by a constitution,
- Companies facing errors due to officeholder place of birth or address issues.
For paper submissions, one must include the proposed company’s name and type, applicable exception, transaction reference number, and any error messages received.
7. AFTER COMPANY REGISTRATION
There are certain obligations of the company after its registration:
- Display the company’s name at all business locations open to the public,
- Ensure the company’s ACN/ABN is on all published documents,
- Keep the company’s details updated.
HOW WE CAN HELP?
- We can help in opening a corporate bank account, apply for a Tax File Number (TFN), and navigate ongoing compliance requirements.
- Our firm can prepare and file essential incorporation documents with utmost accuracy.
- Our experts can draft governance documents such as the company constitution or bylaws, outlining the rules and regulations for operating the business.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
