Australia is a top destination for global companies looking to expand their offices. The country offers one of the most competitive business environments in the world. Australia’s political stability also makes it a good choice for businesses looking to set up shop.
What’s more, Australia’s proximity to Asia-Pacific markets gives foreign companies setting up in Australia access to some of the fastest growing economies in the world.
Before starting a company here, you’ll need to be familiar with our business laws and regulations. This article provides an overview of the process involved with setting up your operations in Australia.
Can a foreign company set up a business in Australia?
Absolutely, a foreign company can establish its operations in Australia. There are a few key things to keep in mind, however. Those include ensuring you meet all the legal requirements and have the necessary funding in place. But overall, setting up a foreign company in Australia is relatively straightforward.
How is a foreign company registered in Australia?
Investors may opt to establish a new foreign-owned Australian company. Or they can register as a foreign-based company and then either operate in their own right or acquire an existing company already in operation (this may require foreign investment board approval).
Suppose you’re coming from overseas and thinking about starting a new business here. In that case, you may choose to do so using several Australian business structures. Each structure comes with its own legal and tax implications. In addition, foreign companies may want to distinguish themselves by registering a trade mark and setting up a website or physical store.
Choosing a business structure
There are a variety of structures a foreign company can use to establish itself in Australia. The four main structures are:
- Sole trader
There are legal and tax obligations you’ll need to consider when deciding on the best structure for your business. The structure you choose will also impact the licences you need to conduct business in Australia and whether or not you need to register as a foreign company doing business in Australia.
Registering a business in Australia
Foreign investors may choose to establish a new foreign-owned Australian subsidiary company to act as their local business to break into the Australian market. Registration with the Australian Securities and Investments Commission (ASIC) is required for foreign and local companies looking to operate in Australia.
Registering your foreign company in Australia
You can also choose to conduct business as a foreign company.
ASIC sets the guidelines that determine who is a foreign company, whether they are carrying on business in Australia and the rights they are entitled to in Australia. ASIC is also responsible for registering, regulating and overseeing the operations of foreign companies, which it does in ways similar to the supervision of their Australian counterparts.
Acquisitions or mergers
Some foreign companies may not wish to set up a proprietary company or a subsidiary. One option is to register as a foreign corporation carrying on business in Australia. Another option would be to take over an existing Australian company.
Foreign investors may submit a formal proposal to acquire or merge with an existing company. Proposals for takeovers are handled by the Australian Foreign Investment Review Board (FIRB).
The FIRB will assess the proposals and advise the Australian government on whether it is acceptable under the current policies.
Selecting a company name
There are a few things to keep in mind when choosing a name for your registered foreign-owned subsidiary company:
- Your proposed company name must not be the same as any existing company’s name.
- The company’s name should not be misleading or offensive to the general public.
- The name of the company may only incorporate certain characters.
Once you have chosen a suitable name, you can apply to register your company with ASIC. The registration is mainly done online these days.
Acquiring business premises
Obtaining commercial land on which to set up your registered foreign company can be done in two ways. You can either purchase the property outright or lease it from the owner. Depending on the entity purchasing the land, you may need FIRB approval.
The regulation of commercial land is decentralised to the state and territory governments. Each jurisdiction has unique requirements for purchasing, leasing and developing commercial property.
Once you have secured commercial land, depending on your intended use of the land, you may need to apply for planning permission from the local council. This permission is necessary to ensure that your company complies with all zoning regulations.
Listing on the Australian Stock Exchange
Australia boasts a thriving stock market, ideal for people looking to trade in the Asia-Pacific region. The Australian Securities Exchange (ASX) is the country’s primary stock exchange.
Both international and Australian companies may apply to have their stocks listed on the ASX. Businesses must satisfy the criteria outlined in the stock exchange listing rules to qualify for an ASX listing.
What’s the difference between an ACN and an ABN?
When you start a new business in Australia, you may need to apply for an Australian Business Number (ABN). An ABN is a unique 11-digit number that identifies your business to the government. It allows you to transact with other companies and register for Goods and Services Tax (GST). You can apply for an ABN through the Australian Business Register (ABR).
If you decide to use a corporate structure for your business in Australia, you’ll also need to register either your new Australian company or your foreign company with the Australian Securities and Investments Commission (ASIC). You will get an Australian Company Number (ACN) if you register an Australian subsidiary. This 9-digit number will serve as your company’s identification. If you’re registering your foreign company, you will be given an Australian Registered Body Number (ARBN), also a 9-digit number.
How much does it cost to set up a business in Australia?
The cost of setting up a foreign company will depend on the type of company you wish to establish. It will also depend on the state or territory where you plan to register your business and whether you wish to register a business name. For example, the ASIC fee to establish a company starts at $443. Once you have set up your company, there is an annual review fee payable to ASIC, starting at $290. There is a discount if you choose to pay ten years’ fees upfront.
You may also need to pay additional fees if you require professional advice to set up your company.
In total, you might need to invest between $1,500 and $5,000 to set up a registered foreign company in Australia. However, this figure will vary depending on your specific business requirements.
What are the legal obligations for starting an Australian company?
There are a few essential requirements that you need to be aware of when starting an Australian company:
Register your business
Firstly, you need to register your business with ASIC if you are using a corporate structure.
Establish a business name
If you are not using your company name to trade with, you will also need to obtain a business name. You can apply for a business name online through
the ASIC website or the Australian Government Business Registration Service.
Once you’ve registered your business, you may need to apply for an Australian Business Number (ABN) and a Tax File Number (TFN). To do so, you’ll need to complete an application form on the Australian Business Register (ABR) website. This can be done at the same time as you register your business.
Fulfil your obligations
It’s important to understand your obligations as an employer in Australia. These obligations include possibly registering for PAYG withholding, taking out workers’ compensation insurance and paying superannuation guarantee charges.
Adhere to Australian consumer law
Finally, you will need to comply with Australian consumer law. This includes ensuring that your products and services are safe and fit for purpose. You’re also obligated to provide accurate and truthful information to consumers.
Does a foreign-owned subsidiary company need a local director?
Yes, foreign-owned subsidiary companies in Australia must have at least one resident director, a director who lives in Australia. A resident director does not have to be an Australian citizen.
The requirement for a resident director is outlined under the Corporations Act 2001 (Cth). The company must also have a registered office address in Australia.
Is incorporating a company the same as registering one?
Incorporating a company is not the same as registering one. However, the two processes are closely related and often occur simultaneously.
Incorporating a company means registering it as a separate legal entity with the relevant authorities. This gives your company certain legal rights and responsibilities and establishes it as a ‘legal person’ in its own right.
Incorporating your company to create a separate legal entity also protects its owners from being held personally liable for any debts or liabilities incurred doing business in Australia.
Meanwhile, registering a company refers to the administrative process of providing certain supporting documents to the relevant authorities to obtain a business registration, thus allowing the foreign company to operate in Australia.
Company registration is usually required for foreign companies in Australia that want to operate here without setting up a corporate entity in Australia.
Should I open a branch or a subsidiary?
There are several factors to consider when deciding whether to set up a local branch office or establish a subsidiary in Australia. These include the level of control and involvement you want from your business. You’ll also need to consider the amount of money you are willing to invest and the potential risks involved.
There may be complex tax considerations that need to be taken into account as well.
Opening a branch office is often seen as less risky than setting up a subsidiary. This is because opening a branch does not involve incorporating a new company. This means less paperwork and compliance requirements. Depending on the home jurisdiction, there may be tax advantages with operating in Australia through a branch office.
However, branch offices are subject to the same laws as a foreign company carrying on business in Australia. This means they must comply with all relevant regulations. Reporting requirements for a branch office can be more onerous than for a foreign-owned Australian subsidiary. This can make running a branch office more complicated than running a subsidiary.
In addition, branches are not separate legal entities from their parent company. This means the parent company is liable for its debts and liabilities. Subsidiaries offer greater flexibility than branches as they are separate legal entities. In other words, they can enter into contracts and transactions in their own name. They’re also not subject to the same regulation as branches and are treated as Australian companies as far as the regulations go.
However, setting up a subsidiary involves incorporating a new company. For more, download our guide to choosing the right structure for your business. We can also assist with all aspects of company formation. Contact us today to learn more.
Set up your Australian business for success
If you’re looking to set up a company in Australia, the process is relatively straightforward. The Australian government has lowered the barriers for foreign investors and businesses to get started. There are also plenty of resources available to help you through the process.
Once you’ve registered your company, it’s important to develop and implement a business plan. This will help you stay on track and make sure your business is headed in the right direction.
Learn more about establishing your presence with an experienced business lawyer
This post gives you a general view of what it takes to set up a company in Australia from a legal perspective. It does not canvas the tax implications of the different structures. However, the situation can change at any time. You should not, therefore, rely on this article as specific to your situation, current or exhaustive.
We are happy if this article has helped you but downloading or reading this doesn’t create a solicitor and client relationship. Instead, we welcome the chance to talk to you to see if forming that relationship would be appropriate in your situation.
For an introductory conversation, please contact us today and let us know how we can be of service.
About Fiona Henderson
Fiona Henderson is an experienced Australian lawyer specialising in establishing business operations in Australia for overseas companies, as well as litigation and dispute resolution matters. Fiona’s advice is highly regarded by growing businesses in the USA, Germany, Austria, Switzerland, Norway, Italy and elsewhere who need an experienced lawyer and advisor to represent their interests in Australia. She regularly acts as their Australian resident director.
The Australian legal system is distinct from the legal systems many of her clients are accustomed to, which is why clients appreciate Fiona’s ability to anticipate and explain the sometimes surprising differences.