Population

The population of Australia is just over twenty million. Most of Australia's population is concentrated in coastal areas with the majority living in the State and Territory capitals.

Political Structure

Australia has a federal form of government under which retains considerable power and authority. There is also an independent system of local governments, which operate at the municipal level. Australia is a democracy and have a written constitution. Federal Parliament consists of two houses, the House of Representatives (lower house) and Senate (upper house). The House of Representatives is responsible for introducing legislation, the Senate is more of a house of review.

Infrastructure and Economy

Australia boasts world-class infrastructure. There are over three million domestic and international flights carrying some 47 million passengers each year. Transportation plays a vital role in supporting economic growth and society's needs by approximately 1.5 billion tons of freight moved along Australias roads each year. Shipping is vital to the Australian economy, about 99 percent of imports and exports are transported by sea, but most of all exports from Australia use air freight to a certain extent. Tourism is now one of Australia's most important industries and account for 5.7 percent of total employment.

Language

The official and spoken language in Australia is English.

Currency

Australian dollar (AUD)

Type of Law

Common

Principal Corporate Legislation

Corporations Act 2001

Type of company for international trade and investment

The following types of companies can be registered in Australia.

Proprietary Companies

• limited by shares
• Unlimited with share capital

Public Companies

• Limited by Shares
• Limited by Guarantee
• Unlimited with share capital
• No Liability Company

Procedure to Incorporate

Applications for registration submitted to the Australian Securities & Investments Commission (ASIC).

• A proprietary and a public company limited by shares can rely on what is known as Replaceable Rules rather than to adopt a Constitution (formerly: Memorandum and Articles of Association).
• A proprietary company limited by shares, if it is to have a constitution, does not need to lodge their constitution with their application.
• A public company relying on the replaceable rules does not have to have a constitution, but if it has a constitution, a copy shall be submitted with the application.
• In all other cases, a copy of the companys constitution must be submitted with the application.

Restrictions on trade

Yes, for specific activities, which include banking, providing public trustee services, insurance, financial services and personnel consulting firms must acquire valid licenses.

Powers of Business

An Australian owned company under the Companies Act, the same powers as a natural person.

Language of Legislation and Corporate Documents

English.

Registered Office Required

Yes, it must be kept in a state or territory of Australia and be open to the public for specified minimum hours on working days.

Principal Place of Business

Yes, it may be the same address as a companys registered office, but it must be the physical address from which the companys main business is conducted.

Shelf Companies Available

Proprietary Company - Yes
Public Company - No

Time to Incorporate

One day.

Name Restrictions

An Australian company can not be registered with a name identical to an existing firm or a registered business name (sole proprietorship or partnership), unless the company has informed the owners of the registered business name and it will acquire such registered company name in the formation.

Other restrictions apply to names that could be considered offensive or undesirable, suggesting an association with the crown, state and federal governments and their departments, the government of a foreign country, aboriginal councils, the police, the words Bank, Trust or trustee. The ASIC maintain a database with restricted names and their foreign language equivalents, insulting names will be computer refused.

Language of Name

English. Names can be in a foreign language, but the restrictions described in the preceding paragraph apply.

Names Requiring Consent or a License

Yes, for specific purposes, which include banks, providing the public trustee services, insurance, financial services and human resources consulting firm. There is an extensive list of words that can be used only with the consent of the relevant Minister of APRA (Australian Prudential Regulation Authority).

Suffixes to Denote Limited Liability

Proprietary Companies

• Limited by Shares (Pty. Ltd. Or proprietary limited or a combination of both)
• Unlimited with Share Capital (Pty. Or Proprietary i.e. no Ltd or Limited)

Public Companies

• Limited by shares (Ltd or Limited)
• Unlimited with share capital (No suffix required)
• Limited by Guarantee (Ltd or Limited. Application can be made to waive (Associations, clubs, with either under certain circumstances) charitable organizations, etc.)
• No Liability Company (N.L. Or No Liability) - (Mining companies only)

Proprietary & Public Corporations

A proprietary company is limited by shares and the number of members is limited to 50 non-employed members (counting joint holders of shares as a person) and not counting a person who:

• Is employed by the Company or any of its subsidiaries and is a member of the company, or
• Was an employee of the Company or any of its affiliates iwhen he or she joined the Company.

Constitution of a proprietary company usually limits the marketability of its shares bestowing absolute discretion upon the directors and a proprietary company cannot offer its shares for sale or subscription to members of the public .

All others not covered by the above definition are deemed to be public companies.

Disclosure of Beneficial Ownership to Authorities

Companies must disclose whether incorporation and when situations change:

• The ultimate holding company (if any) of an Australian company, and
• Whether or not (Y/N) shares held by a registered member are beneficially held.

Authorised and Issued Share Capital

The Companies Act no longer provides for the terms of a company having a declared Authorized Capital or a par value for its shares. A company may issue up to any amount of shares, and within reason, at any value.

Classes of Shares Permitted

Shares may be issued bearing varying qualities and obligations relating to voting rights, rights to dividends and profits on liquidation and as to priority of payment of dividends and whether they are cumulative. Shares may also be issued as partly paid by installments or a set of future payments to be determined by the Board.

Taxation

Tax is levied at the rate of 30% of net assessable income less allowable deductions in the world. Tax losses can be carried forward indefinitely.

Tax Year

Tax year in Australia ends on 30 June. A substituted accounting periods can be used to co-incidence with foreign holding companies.

Goods & Services Tax

The rate of GST is 10%

Dividends Paid by an Australian company

If fully franked dividend (for example: Dividends come from profits on which Australian company tax has paid) is paid by an Australian subsidiary to its foreign parent, there is no dividend withholding tax to be paid. To the extent that dividends are unfranked, dividend withholding tax of 30% (or reduced by an applicable double tax treaty) is based on the gross unfranked account.

Double Taxation Agreements

Australia has concluded double taxation agreements with over 50 countries.

Financial Statement Required

Yes, companies should prepare up to date financial records that:

• correctly record and explain its transactions (including any transactions as a trustee)
• Explain the company's financial position and results.

All companies must have accounts, so that:

• True accounts of a company may be prepared, if necessary
• Accounts can be conveniently and properly audited if necessary, and
• The company can obey the tax laws.

If it is a "small proprietary company" (as defined in the Corporations Act 2001), it will generally not be required to prepare formal financial reports under Corporations Act each year and submit them with ASIC. However, the company must still keep records, and may need financial reports for tax purposes.

Large proprietary companies and public companies - even non-profit public companies - must prepare financial reports and have them audited and lodge them with ASIC.

Directors

A proprietary company has at least one director (who must be resident in Australia) and a public company must have at least three directors (two of them must be resident in Australia). Board must be made up of all natural persons.

Company Secretary

A proprietary company can or can not have a company secretary and may have more than one. If a company secretary is appointed, he or she must be a resident in Australia. If more than one is appointed at least one must be a resident in Australia. A public company must have a company secretary who is a resident in Australia.

Annual Review

An annual return is not required to be posted on the anniversary of the date of incorporation. ASIC sends to the company, annual review documentation that shows what describes the ASIC has recorded with regard to the structure of the company. The company is required to examine this data and inform ASIC of any changes or deviations.

At the same time:

• The Directors are required to pass a Declaration of Solvency.
• The company is obliged to inform the annual review fee of AUD 212.00 to the ASIC within two months. Late payment penalties are applied and unsubscribtion could be the final result

How can I get more information on company formation in Australia?

Please contact us if you wish to open a company in Australia and we will be pleased to discuss your Australian company formation matters in greater detail.

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