Offshore Company Formation in Australia

Any individual, company, joint-venture, partnership, branch of a foreign company and trust can operate set up a business in Australia. While each structure has its own legal and tax implications, a foreign business owner or investor can operate a business in Australia using these business structures. What most people do is to establish an Australian subsidiary by registering or acquiring an Australian company while the other way is to simply register a new foreign company. Governed by the Incorporation Act 2001, the Australian Securities and Investments Commission (ASIC) requires all companies to register with them. Choose carefully and examine which business structure suits the company’s operations in Australia.

Establishing a New Australian Subsidiary

There are two ways to establish a new Australian subsidiary. The company can register a new Australian company or acquire an existing Australian company known as a shelf company. According to the Incorporation Act 2001, the act allows the following 4 types of registrations:

  • A company limited by shares
  • A company limited by guarantee
  • A company with unlimited liability
  • A no liability company for mining purposes

The most common choice is a company limited by shares and they include proprietary, private or public company. The advantage of a company limited by shares have over other types of registrations is it is more simple and cheaper to manage.

The company needs to follow the following instructions to register with the Australian Securities and Investments Commission (ASIC):

  • Ensure the availability of the company’s name by checking if it is still available or if it contains restricted words, expression, or a suggestion relating a connection to the government
  • If the name is available, the company have the right the reserve the name for a period of 2 months while they prepare the necessary registration documents
  • Complete and submit the necessary registration documents along with the application form
  • Provide a registered address for the office
  • A private company does not need to have a company secretary but it needs to have at least one director that must reside in Australia
  • Public company needs at least 3 directors and one company secretary that must reside in Australia
  • No minimum capital requirements
  • Apply for Australia Business Number (ABN) and a Tax File Number (TFN)
  • Register for Goods and Services Tax (GST)

Acquiring an Australian Company

The other alternative is to acquire the shares or the assets of an established Australian company. According to Foreign Acquisitions and Takeovers Act 1975, foreign investors have to make sure that they have the approval for investment in Australia before they acquire an Australian company.

Foreign investors can make a proposal of their interest to invest in Australia and inform the Australian government on the following things:

  • Acquisitions of substantial interests in existing Australia companies or business with the value of more than Australian Dollars 231 Million and the threshold is Australian Dollars 1004 Million in non-sensitive sector for US investments
  • Acquisitions of substantial interests in existing offshore companies that are Australian subsidiaries with the value of more than Australian Dollars 231 Million and the threshold is Australian Dollars 1004 Million in non-sensitive sector for US investments
  • Direct investments of any amount by foreign governments and their related parties

 

A substantial interest situation will occur when a foreign investor or any of his or her associates owns more than 15 percent of the company or a group of several foreigners owning 40 percent of the company on average in relation to the corporation, business or trust ownership. In this situation, the Australian government can reject any proposals that harm the national interest Under the Foreign Acquisitions and Takeovers Act. While the national interest is not in the Act itself, the treasurer has the power to determine which proposals undermine the national interest. The national interest includes a number of things such as national security matters, community interests, development, government policies, taxation issues, competition issues, and environmental issues. For more information, please refer to the guidelines on national interests in the Government’s foreign investment policy.

The Foreign Investment Board (FIRB) also gives advice on foreign investment proposals to the government. To start, applications for foreign investment is found in the Foreign Investment Board’s official website.

If the company choose to remain as a foreign company, they may apply to get listed on the Australian Stock Exchange (ASX). To do so, the company have to comply with the requirements set by ASX including disclosing the company’s information, records, and reports. For more information, check out Australian Stock Exchange official website.

 

Registering a Foreign Company

The instructions to register a foreign company with the Australian Securities and Investments Commission (ASIC) are:

  • Ensure the availability of the company’s name by checking if it is still available or if it contains restricted words, expression, or a suggestion relating a connection to the government
  • If the name is available, the company have the right the reserve the name for a period of 2 months while they prepare the necessary registration documents
  • Complete and submit the necessary registration documents including a certified copy of the company’s certificate of incorporation or similar documents, and constitution documents
  • Provide a registered address for the office
  • Appoint a local agent to represent the company in making sure the company complies with the legal requirements in Australia
  • Registration will occur in within 5 working days subject to ASIC approval on the application and supporting documents, and after the foreign investor pays the statutory registration fee
  • The ASIC will issue the company with an Australian Registered Body Number (ARBN
  • The ASIC will issue the company with a  Certificate of Registration to proof its evidence as a registered foreign company in Australia

 

After that, the offshore company needs to provide a copy of its balance sheet profit and loss, and cash flow statements to the ASIC on an annual basis. It is also mandatory to report any changes to the structure of the company including its name, constitution, change of directors, change of local agent, and office addresses to the ASIC within a prescribed time limit.