Setting Up a Foreign-owned Subsidiary in Australia

RESIDENT DIRECTORS, CAPITAL REQUIREMENTS, TAX REGISTRATION AND WHAT OVERSEAS COMPANIES NEED TO KNOW

In Australia, foreign businesses must meet specific legal and operational requirements to establish a subsidiary, including appointing an Australian resident director and registering a local office.

While setting up a company is straightforward, ensuring compliance with shareholding structures, tax obligations, and regulatory nuances—especially when importing goods—requires strategic planning and informed decision-making.

 

 

VIDEO SCRIPT

Today I am going to be talking about the requirements for an overseas company to set up an Australian subsidiary.  I often get enquiries from foreign businesses wanting to start up operations in Australia.  There are a few things that you need to know in order to get started.

 

While there are a number of different options available to set up a business in Australia, probably the most common and the most effective is to set up a wholly-owned Australian subsidiary of your foreign entity, or if you are a sole trader or in a partnership, simply to set up an Australian company.  This is particularly relevant if you wish to import goods that are regulated by the Therapeutic Goods Act.  If you want to import goods that are regulated by the Therapeutic Goods Act then there are a few extra things you need to know and I will deal with that in a separate vlog.

 

There are two relevant things that a foreign business setting up in Australia needs to have.

 

First, the Australian company must have one director of the company who is “ordinarily resident” in Australia.  That resident director can be anybody, an employee or a third party such as an external accountant or solicitor.  I a resident director for a number of foreign corporations. That is a service that I am always happy to provide if you want someone independent from the business to be your Australian resident director.

 

Companies in Australia only need to have one director, but as a foreign business, I recommend that you have at least one director from your business, if not more than one so that your business controls the board.

 

Secondly, there needs to be at least one shareholder. Where your business is a foreign corporation then I recommend this corporation be the 100% shareholder since there is no requirement that the shareholder is an Australian resident.  Alternatively, if you are not a corporation then it is possible to split your shareholding between the owners of the business.

 

A company in Australia must have an initial capital.  This can be as little as $1.  The Australian start up costs can be financed either by capital or by a loan from the holding company.  The amount does not need to be made available immediately on incorporation but the documents which are used to establish the company need to set out the amount of the initial capital that is intended to be put into the company.

 

All companies in Australia must have a registered office and principal place of business.  These do not need to be at the same address.  The registered office is the official address for the company and is the address on which all official documents must be served. In some circumstances in Australia there are strict time limits imposed on a company to respond to documents served on a company’s registered office so it is important to ensure that your registered office is somewhere where any documents served there will immediately be brought to your attention.

 

If your business is going to trade in Australia then I recommend that the company be registered for tax purposes with an Australian Business Number.  This will enable you to register for the Goods and Services Tax and claim input credits if your business has sufficient turnover to require GST to be paid.

 

Setting up a company in Australia is a very simple process and takes less than 48 hours to do once the relevant information is provided.  The public register of companies in Australia provides the full name, residential address, date of birth and place of birth of all company directors. It is possible to suppress your residential address if you have concerns about your physical safety.

 

As I’ve said before, depending on the nature of the company and the business that you wish to operate in Australia, there may be other requirements that need to be satisfied in order for the company’s proposed business to be operational.  For example, as I mentioned above, if you are importing and selling goods manufactured by your parent company then you may need to obtain certain government approvals to import the goods.  I will deal with some of these requirements in a subsequent vlog.