Company Incorporation
Australia
Geographical Information
Australia became a British commonwealth in 1901. Blessed by rich natural resources, the country enjoyed rapid
gains in herding, agriculture, and manufacturing and made a major contribution to the British effort in World Wars
I and II. Australia subsequently developed its minerals, metals, and fossil fuel markets, all of which have become
key Australian exports. Long-term concerns include pollution, particularly depletion of the ozone layer, and management
and conservation of coastal areas, especially the Great Barrier Reef. Sydney will host the 2000 summer Olympics.
Climate: generally arid to semiarid; temperate in south and east; tropical in north.
Natural resources: bauxite, coal, iron ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, petroleum.
Geography—note: world's smallest continent but sixth-largest country; population concentrated along the
eastern and southeastern coasts; regular, tropical, invigorating, sea breeze known as "the Doctor" occurs
along the west coast in the summer.
Population: 18,783,551 (July 1999 est.).
Religions: Anglican 26.1%, Roman Catholic 26%, other Christian 24.3%, non-Christian 11%.
Languages: English, native languages.
Structuring Requirements for Australian Companies:
Introduction to Australian Corporations Law
The Australian Corporations Law 1989 was amended on the 11 December 1995 by the passing of the Corporate Law
Simplification Act and on 1 July 1998 by the passing of the Company Law Review Act 1998. The basic effects of these
amendments are to substantially ease the regulatory burden applying to small businesses by, for example, reducing
reporting obligations in annual returns.
Types of Companies:
There are basically two different types of companies in Australia, a 'Public' company and a 'Proprietary'
company. A public company is quite simply any company other than a proprietary company and a proprietary company
is one which has its members restricted to 50 non-employee shareholders. Proprietary companies are further divided
into classifications of 'large' or 'small'. Large proprietary companies are those that satisfy any two of the following
criteria:
- Where consolidated operating revenue exceeds A$10 million
- Where consolidated gross assets exceed A$5 million
- Where the company and its controlled entities have 50 or more employees
Small proprietary companies are, therefore, those that do not meet any two of the three criteria listed and
are relieved of certain financial reporting requirements in their Annual Returns under the Corporations Law and
are not required to hold Annual General Meetings. (These concessions reflect the Government's desire to ease the
regulatory burden applying to small businesses.)
Proprietary Companies
The reconsideration of the needs of small business lead to a new approach to the proprietary company and this is
the key theme of the First Corporate Law Simplification Act. The concept of the ‘exempt’ and ‘non-exempt’ classification
of proprietary companies has been abolished and proprietary companies are now classified as ‘large’ or ‘small’.
Large proprietary companies are those that satisfy any two of the following characteristics:
- The consolidated gross operating revenue for a financial year of a company is more than A$ 10,000,000
- The consolidated gross assets at the end of a financial year are more than A$ 5,000,000
- A company and the entities it controls employs more than 50 people at the end of a financial year
Small proprietary companies are therefore those that do not meet any two of these three criteria.
Small proprietary companies now do not have to prepare audited financial statements unless:
- Required to so by the Australian Securities & Investments Commission (‘ASIC’)
- Required to do so by members holding 5% or more of a company’s shares
- It is controlled by a foreign company and not covered by consolidated accounts lodged with the ASIC
Directors / Members
The major (non-accounting) changes affecting proprietary companies (regardless of size) are:
- They are now able to have only one shareholder and one director (This is attractive as people will no longer
need to find a ‘passive’ second director - however, a word of warning, for existing two member family type companies,
consideration should be given to Capital Gains Tax and Stamp Duty implications before disengaging a second member
of a company)
- They do not have to hold annual general meetings
- Multiple shareholder companies are able to pass ordinary resolutions by using ‘flying’ minutes
- Sole member companies are able to pass resolutions for general meetings by writing up a decision. A resolution
by a sole director may be passed in similar manner.
Registers
A number of registers no longer have to be kept, those remaining are:
- The Register of Members
- The Register of Option Holders
- The Register of Debenture Holders
Existing Proprietary Companies
It is important to note that the Corporate Law Simplification Act only makes single shareholder / director companies
possible and that it does not convert existing companies to this status. Our Sydney office can provide advice and
professional corporate secretarial services in this regard.
Minimum Structuring Requirements
| |
Public |
Proprietary |
| Minimum number of members: |
1 |
1 |
| Maximum number of members: |
unlimited |
50 non-employee |
| Minimum number of Directors: |
3 (2 of which must be Australian residents) |
1 ( Must be Australian resident but additional directors do not.) |
| Company Secretary |
1 (Must be Australian resident) |
1 (Must be Australian resident) |
| Registered Office |
Yes |
Yes |
NOTE: For a proprietary company, a sole Director may also be the Secretary.
|
