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The Secrets of Incorporate Australian Company
May 14, 2022
Olivia Smith
Incorporate Australian Company

Establishing a company in Australia means creating a separate legal entity. However, the rules that prevail in the country will limit your liability and function as a catalyst for business growth. The process of Incorporating an Australian Company comprises multiple steps. You will have to go through a large amount of paperwork.

The procedures include:

Deciding on the type of company

The first step to Incorporate an Australian Company is deciding the type of company you want to establish, i.e., a company limited by shares or an unlimited company. Based on your submission, the ASIC (Australian Securities and Investments Commission) may ask you the following questions:

  • What class of shares will each member take up?
  • Will the members beneficially own shares?
  • How much will the members pay?
  • Will members pay full on registration?

You can also form a company limited by guarantee where you have to submit the detail of the proposed amount of the guarantee. It is an amount that each member agrees to in the application. Companies limited by guarantee are less common in the country.

Establishing an appropriate internal governance structure

A new enterprise must establish an internal governance structure to enable:

  • Share transfers.
  • Appoint of directors and their removal.
  • Procedures for director and member meetings.

Creating an internal governance structure is mandatory for new companies under Australian Legislation. With this, the administration wants to see that the company is keen to minimize risks and can formalize the decision-making process. However, proprietary companies with a single director or shareholder do not need a governance structure.

The company may choose to draft its constitution while setting an internal governance structure. Alternatively, it can use the Replaceable Rules. Corporations Act incorporates these rules. The company proposer group can adopt the rules in place of a constitution or use those combined with a constitution.

Companies establishing internal governance stay updated with internal governance requirements.

Frame a list of the proposed directors and secretaries and gain consent from them

The applicants involved in registering a new company must select the directories. They must appoint a company secretary at the inception stage. Such an appointment is necessary as they need to obtain written consent from the proposed directors and the secretary. When you submit the documents to the ASIC, it is not an essential document. Again, it must be in the company records after incorporation.

Select a company name and register the same

Individuals proposing to set up a new company can select a name for the company. They must reserve their name and register with the Australian Securities and Investments Commission.

If the entrepreneurs or the proposed directors cannot agree upon a name, they can use the Australian Company Number (ACN). ASIC issues such a number in place of a company name.

Designate a registered address

Whether you propose a name for your new company or decide to use the CAN (Australian Company Number), your application must contain a registered address for the proposed organization. The authority will make police and administrative verification before registering the company.

The address mentioned in the application will be the registered address for your company.

Select a place for conducting the business

The entrepreneurs must also mention a place from where they propose to conduct the business. It may be their premise, a rented place, or leased accommodation.

Forming a share structure

Companies with multiple shareholders must create a formal shareholders agreement. The agreement is crucial as it specifies the agreement between shareholders. It also defines their responsibilities and roles.

Jointly, the directors will also form a share structure for the company. It is needed as the proposers will have to submit while submitting the application to Incorporate an Australian Company.

Submit an incorporation application with ASIC

The final step in the Incorporate an Australian Company procedure is completing registration with the Australian Securities and Investments Commission. The individual or the group must submit the completed Form 201 Application for registration as an Australian Company. The application will also accompany the stipulated fee.

Obtain a certificate of registration

ASIC sends the Certificate of Registration after receiving and approving the application formalities. The company must display the certificate at its principal place of business.

Why should you complete Incorporation formalities as an Australian Company?

  • Small single-owner companies pay corporate tax @ 27.5%. It is considerably lower than the highest tax rate for individuals, i.e., 49 percent maximum. Running the business as a private limited company is thus cost-effective in Australia.
  • Companies in the country enjoy the advantages of a large, mixed-market economy. Besides, you can also take benefits of several free-trade agreements. It leaves enormous potential as a foreign investor in the USA, European countries, and ASIA.
  • The provision frees the traders from the regulatory burden. The threat of stealing customers from competitors is also non-existent.