[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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Any person who is or wishes to become a director of a company, who does not already hold a Director ID, must apply through the Australian Government’s Business Registry Services. The application must be made by the individual and cannot be made on the individual’s behalf. Prior to applying for a Director ID, individuals are required to verify their identity through the myGovID platform. Once their identity is verified, the application for a Director ID must include:
Local Shareholding Requirements There are no minimum start-up capital requirements for establishing a company in Australia. In fact, it is very common for many companies to start out as “$2 Companies”, being a company with only AUD $2 in issued share capital. Australian companies must have a minimum of one shareholder. There is no local shareholding requirement for establishing a private company in Australia, however, it is worth noting that foreign persons or entities that wish to acquire shares in established Australian companies, or interests in Australian businesses, may be required to obtain the approval of the FIRB prior to such acquisition occurring. Australian private companies must not have more than 50 shareholders (excluding any employee shareholders). Where this 50- shareholder limit is exceeded, the Corporations Act requires the company to convert to a public company. Director’s Duties Director’s duties in respect of Australian companies are largely set out in the Corporations Act, however there are some duties which derive from Australian common law. These duties include: • Duty of care and diligence – Directors must act with a degree of care and diligence in performing their role as a director. The relevant level of care and diligence is measured against the expectation that a reasonable person would have of a person acting in the capacity of a company director. A director may not be liable for breach of their duty to exercise care and diligence, if it can be established that the director: a) made the relevant decision in good faith and for a proper purpose;
the individual’s tax file number; and
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• residential address as held by the ATO.
Some applicants may also be required to provide information from two of the following documents to further verify their identity: • bank account details the ATO has on record;
an ATO notice of assessment;
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• APRA super fund account details including super fund's ABN. Note: Self-managed super fund details are not accepted;
a dividend statement;
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• a Centrelink payment summary; and/or
• a Pay As You Go ( PAYG ) payment summary. Once an individual has a Director ID, they will not have to apply again, even if they change companies, stop being a director or change their name. If a director does not reside in Australia, the Australian Government’s Business Registry Services sets out different requirements for the verification of identity, which requires the application and certified copies of identity verification documents to be submitted via post.
ILN Corporate Group – Establishing a Business Entity Series
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