[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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▪ the shareholders of the company and the number of shares held by each shareholder; ▪ the address for the registered office of the company and its principal place of business; ▪ the amount paid by each shareholder for its shares; ▪ the proposed name of the company; and ▪ details of any ultimate holding company of the company. Any constitution for the company must also be lodged. Once registration is complete, the company will be issued an Australia Company Number ( ACN ). The company’s name and ACN must be displayed on documents published by the company, and wherever the company conducts business. Australian Branch An overseas company wanting to carry on business in Australia must either incorporate a new company in Australia (refer above) or register itself as a foreign company with ASIC and established a branch office. Registration of a branch office under the Corporations Act gives the overseas company the right to carry on business in Australia. The overseas company must comply with Australian law and is subject to certain reporting and disclosure requirements. A foreign branch is not classified as a separate legal entity. Therefore, the overseas company will be liable for all of the debts and obligations of the Australian branch. An Australian branch of a foreign company:
• is taxed as a separate entity in Australia, on all income sourced from Australia; • must have a local agent who is responsible for the company’s obligations in Australia and may be personally liable for breaches; and • must have a registered office in Australia. Choice of Australian Branch or Subsidiary There are a number of factors to consider when deciding whether to establish an Australian branch or incorporate a new company in Australia as a subsidiary of a local parent company. These factors include the following: • a subsidiary is a separate legal entity from its parent company. It has limited liability, and the parent is not usually liable for the debts or obligations of the subsidiary. There are some exceptions to this, such as in the case of the insolvency of the subsidiary, or where the parent has provided a guarantee of other form of security to support the obligations of its Australian subsidiary; • an Australian branch of an overseas company is not a separate legal entity. Therefore, the overseas company will be liable for all debts and obligations of the Australian branch; • the use of an Australian branch may cause practical difficulties when dealing with financiers. For example, if finance from an Australian financial institution is required, then that institution may require audited financial statements relating to the Australian operations of the applicant. This may not be readily available in an acceptable form in the case of an Australian branch;
ILN Corporate Group – Establishing a Business Entity Series
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