Types of company structures in Australia

A foreign company establishing a business presence in Australia usually establishes an Australian subsidiary company or a branch office.

  • The Australian limited liability company (private proprietary company) is the most common type of entity in Australia. Most companies, particularly small companies, are proprietary limited and must include the word “Proprietary” and “Limited” or “Pty Ltd” in their name;
  • Forming an LLC in Australia can be done with only i) one shareholder ii) one resident director iv) no minimum paid-up share capital. To help our overseas Clients’, CLA Consultants Group can provide resident director services;
  • The private proprietary company must prepare annual financial statements. Only if annual sales exceed AU$75,000 (approximately US$55,000), the Australian authorities require local businesses to register for and report GST;
  • A proprietary company is prohibited from raising funds from the public.
  • In Australia, a business may be carried on through a trust, where a trustee (often a proprietary limited company) owns assets of the business and carries on the trading activities on behalf of the beneficiaries of the trust.
  • Income arising from a trust is generally taxed in the hands of the beneficiary rather than the trustee. The trading trust is an interesting business vehicle for a family-owned business.
  • The most common business trust is a unit trust under which the beneficiaries’ interests in the trust are divided into “units”. The trading trust is usually structured as a tax transparent entity, not subject to corporate income tax in Australia, provided all its income is transferred to the trust’s beneficiaries;
  • To obtain an Australian Business Number and a Tax File Number, the trustee(s) must register the trust with the Australian Companies Registrar and with the ATO. Furthermore, it is necessary to appoint a resident trustee and a public officer;
  • The Australian limited liability company (private proprietary company) is the most common type of entity in Australia. Most companies, particularly small companies, are proprietary limited and must include the word “Proprietary” and “Limited” or “Pty Ltd” in their name;
  • Forming an LLC in Australia can be done with only i) one shareholder ii) one resident director iv) no minimum paid-up share capital. To help our overseas Clients’, CLA Consultants Group can provide resident director services;
  • The private proprietary company must prepare annual financial statements. Only if annual sales exceed AU$75,000 (approximately US$55,000), the Australian authorities require local businesses to register for and report GST;
  • A proprietary company is prohibited from raising funds from the public.

Registration of a public company in Australia follows similar requirements to those of a proprietary company. The main differences are i) the need to appoint at least three directors, two ordinarily resident in Australia and ii) the obligation for the annual financial statements to be submitted for an independent statutory annual audit; and

  • A foreign company wishing to establish a place of business or carry on a business in Australia without incorporating a local subsidiary must register as a foreign company with ASIC and obtain an ARBN;
  • The incorporation of a branch requires the appointment of a local agent to accept notices on behalf of the foreign company and a legal registered office address. After its registration, the branch must submit annual financial statements to the Australian Companies Registrar (ASIC);
  • An overseas company carrying on business in Australia through a branch is subject to Australian company tax at the current rate of 30% on profits attributable to that branch;

A foreign company which does not intend to conduct business in Australia may seek to establish a representative office for marketing and research. The representative office is allowed to conduct only limited, non-commercial activities in Australia; and

  • To conduct financial services businesses in Australia, CLA Consultants Group will secure an Australia Financial Services (AFS) licence for our Clients. This licence is regulated by ASIC;
  • An AFS licence is required if the business activity includes i) providing financial product advices to customers ii) dealing with financial products iii) market making iv) custodial or depository services or v) trustee company services;
  • ASIC reviews and approves licence applications within four months. During the review, there is a 70% probability ASIC will revert asking for additional know your customer (KYC) documents.

Steps to take for AFS licence application

  1. Prior to licence application, CLA Consultants Group will assist our Client to prepare required documents such as i) a quality business plan ii) licence application form iii) ‘fit and proper’ people proofs iv) organisational competence and v) financial statements and financial resources;
  2. If required, CLA Consultants Group will assist our Client to draft internal control documents such as i) risk management policies ii) external dispute resolutions iii) AML/CFT policies and iv) general terms and conditions;
  3. To qualify for an AFS licence, our Client is required to have local economic substance. CLA Consultants Group will help to secure a local physical office in the Central Business District, as well as help hire qualified local employees. One local employee should be appointed as a Responsible Manager and is required to be fit and proper. Thereafter, monthly rentals and salaries will be paid directly by our Client to the landlord and employees;
  4. In the event ASIC decides to grant our Client an AFS licence, a draft licence will be issued. Once our Client confirms to proceed, ASIC will send a requirements letter. Our Client is given a timeline to finalise any outstanding matters as quickly as possible;
  5. Once step 4 is completed, ASIC will send the final licence to our Client. The final licence will include i) licensee’s name ii) Australian Business Number (ABN) iii) licence number and iv) date of effect of the licence. Our Client will then be able to legally conduct financial services in Australia.
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Mr. Petar Chakarov
Senior Manager, Sales & Business Development
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