ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA TYPES OF BUSINESS ENTITIES There are a number of business structures to choose from when starting a new business venture in Australia. Investors need to determine which form of business organisation is the most appropriate for their requirements. The main types of business structures used by investors in Australia are:

The most common company types are public companies and proprietary (or private) companies. A proprietary company is generally simpler and less expensive to administer than a public company because it is subject to fewer administrative requirements imposed by the Corporations Act.

Proprietary company limited by shares (“Pty Ltd”) This is the most common form of corporate business entity in Australia. The company is incorporated with share capital which is owned by the shareholders. The liability of the shareholders is limited to the amount which is unpaid on their shares. Pty Ltd companies:


companies, including branch offices of foreign companies;


joint ventures; and

• trusts. Each particular structure has advantages and disadvantages. Therefore, specific legal and accounting advice should be obtained before deciding upon the most appropriate investment vehicle. Company All Australian companies are regulated by the Corporations Act 2001 (Cth) ( Corporations Act ). A foreign investor can register an Australian company under the Corporations Act. The “limited liability” company is the most common business structure used by foreign investors in Australia. A company is its own legal entity and has the same rights and obligations as an individual person. This means that a company can incur debt, can sue and be sued, is taxed as a separate legal entity and must file its own tax return. A significant benefit in choosing a company structure is that the liability of the owners of the company (the shareholders) to third parties is generally limited to the amount (if any), which is unpaid on their shares.

must have at least one, but no more than 50, non- employee shareholders; must have at least one director residing in Australia; must have a registered office in Australia; must have a public officer, who is responsible for complying with the tax obligations of the company and dealing with the Australian tax authorities; may have a company secretary, but does not need to; and have fewer fundraising options available, compared to a public company.

Pty Ltd companies are further divided into “large proprietary” and “small proprietary” companies.

ILN Corporate Group – Establishing a Business Entity Series

Made with FlippingBook Ebook Creator