FAQs - Australian Companies

At CoSec Consulting, we have helped hundreds of clients set up companies in Australia. We have compiled some of the most common questions and answers below to aid your understanding of Australia’s basic corporate requirements.

Q: Who can be a director of an Australian company?

In summary, Section 201B of the Corporations Act 2001 states that a director can be any individual who:

Q: Can a foreigner be a director of an Australian company?

A: Yes, provided they meet the section 201B requirements of the Corporations Act 2001, which are in summary any individual who:

               

Q: Can all of the directors of an Australian Company be foreigners?

A: No. Proprietary Limited (Pty Ltd) companies must have at least one Australian Resident as a director. Public Companies (ending in Limited or Ltd) must have two directors who are Australian residents. See our Fact Sheet “What is an Australian Resident Director and why do I need one?” for more information. See also our Resident Director service for more information.

 

Q: How many directors does my company need?

A: A Proprietary Company (ending in Pty Ltd) may have only one director. A Public company (ending in Limited or Ltd) must have a minimum of three directors. There is no prescribed maximum number of directors in the legislation.

 

Q: I spend a lot of time overseas. Am I considered a resident by ASIC?

A: The Corporations Act states that a Resident Director “must ordinarily reside in Australia.” “Ordinarily reside” is not a concept defined by the Corporations Act (2001) and ASIC has not provided guidance on what constitutes a resident of Australia. This interesting article from McMahon Clarke may provide some insight using other pieces of Australian legislation.

 

Q: Do the directors need to hold a meeting to make board decisions?

A: No. Under section 248A of the Corporations Act, which is a replaceable rule, the directors of a company may pass a resolution without a directors' meeting being held if all the directors entitled to vote on the resolution sign a document containing a statement that they are in favour of the resolution.

A company’s constitution may allow for further methods of board approval, including email, teleconference and other electronic means.

 

Q: What is a constitution?

  1. According to ASIC, The constitution is a contract between:

A constitution is a document that outlines the rules governing the relationship between and activities of the company, its directors and shareholders. This document generally provides guidance as to how meetings are run (both board meetings and members meetings) as well as a host of other procedural governance items. A company may adopt a constitution either on or after registration.

 

Q: Can an Australian company have foreign shareholders?

A: Yes. The Corporations Act 2001 does not restrict share ownership to Australians. However, foreign shareholders should consider Australian laws in relation to foreign residents owning shares in Australian companies, as well as the tax and other laws in their country of residence.

 

Q: What is a Public Officer and who can be one?

A: A Public Officer is a company's representative to the ATO and is responsible for the company's obligations under Section 252 of the INCOME TAX ASSESSMENT ACT 1936.

The public officer of a company is the person who we normally deal with in relation to the entity's tax affairs, for example, record keeping and submitting company returns.

A public officer must be an individual who meets all of the following criteria:

More information can be obtained from the ATO Website.

 

Q: Can a foreigner be a public officer?

A: No. The Public Officer must ordinarily reside in Australia. CoSec offers Public Officer services as part of our Resident Director service.

 

Q: How is a public officer appointed?

A: Generally, the Board will pass a resolution to appoint the public officer. The Public Officer, like a director, needs to sign a form consenting to the appointment. This form would be maintained in the company’s Corporate Register. Once consent has been obtained, the ATO must be informed of the appointment in writing.

 

Q: What is a Corporate Key?

A: A corporate key is number generated by ASIC which is unique to your company’s ACN. Generally, corporate key details are received from ASIC within a week registration. It should be considered highly confidential – it is like a PIN for your company information. It should not be displayed publicly and only one will be assigned to your company.

More information can be obtained from the ASIC website.

 

Q: What is a Tax File Number or TFN and does my company need one?

All businesses need a tax file number (TFN).

A TFN can be obtained at the same time as an Australian Business Number (ABN), using the same application form. This can be done through the Australian Business Register.

 

Q: What is an ACN or Australian Company Number?

Upon registration of your company, it will be issued with a unique, nine-digit number. This is an Australian Company Number (ACN) and must be displayed on all company documents. More information can be obtained on the ASIC website.

 

Q: What is an ARBN or Australian Registered Body Number?

An Australian Registered Body Number (ARBN) is a unique, nine-digit number allocated by ASIC when a body is registered with them other than as a company. Foreign companies wishing to register with ASIC will receive an ARBN instead of an ACN (Australian Company Number).

A body that has been issued with an ARBN can apply for an ABN.

For more information about Registered Foreign Companies, please see our fact sheet "Doing Business in Australia - Registered Foreign Companies"

 

Q: What is an ABN or Australian Business Number?

ABNs are a unique number used to identify business names and companies, and for various tax and other business purposes. They are issued by the Australian Business Register. It is generally comprised of your ACN with a two-digit prefix.

With an ABN you can:

 

Q: How do I apply for an ABN?

A: ABNs are issued by the Australian Business Register.

When applying for an ABN, directors who are Australian residents must provide their personal tax file number (TFN) for identification purposes.

Non-resident directors must provide certified copies of identification documents. Non-resident shareholders must also provide certificied copies of their identification documents (for individuals), or a certified copy of their certificate of incorporation if the shareholder is a corporation.

This process can take several weeks, so being proactive with these documents is essential if time is an issue. These documents are often required for other purposes, such as opening an Australian bank account.

 

Q: What is FBT or Fringe Benefits Tax?

FBT can apply where a benefit is provided to an employee (in respect of their employment). This could take many forms, including provision of a motor vehicle, payment of school fees, provision of car parks and gym memberships, etc.

FBT is paid by the company, and is equivalent to the highest marginal tax rate for individuals.

More information regarding FBT can be found on the ATO website.

 

Q: Does my company need a constitution?

A company will be governed by:

(a)    The replaceable rules

(b)    A constitution; or

(c)     A combination of both.

The following companies must be governed by a constitution:

 

If a company does not adopt a constitution on incorporation, it will be subject to the Replaceable Rules, which are basic rules which appear in the Corporations Act. See below for a description on Replaceable Rules.

 

Q: What are the Replaceable Rules?

A: If a company doesn't adopt a constitution, they can use the Replaceable Rules instead. Replaceable rules appear in the Corporations Act and provide basic rules for governing a company.

Replaceable rules do not apply where a company’s sole director and sole shareholder is the same person.

A detailed article showing the interaction between the constitution and the replaceable rules appears on the ASIC website.

 

Q: How many shares should I issue in my company?

There is no normal number of shares that needs to be issued in a company. Consideration should be given to:

 

Q: What information do I need to provide as a director?

When consenting to be a director of a company, you will need to provide:

 

Q: What reporting requirements will my company have?

Please see our “Incorporating A Proprietary Company In Australia” fact sheet, which contains information about reporting requirements in Australia, in terms of financials and also ASIC compliance.

 

Q: What is a Registered Office" and do I need one?

All Australian companies need a Registered Office, which is the 'official' address of the company, where correspondence is sent from ASIC, the Australian Taxation Office (ATO) and other regulatory bodies. It is also used for legal service of documents. The registered office does not have to be the same address as where the company conducts business - it is often located at the offices of lawyers, accountants, or CoSec Consulting ourselves.

Follow this link for more information about our Registered and Virtual Office Services.

Q: What is the Principal Place of Business address? 

This is the 'operating' location of the business, which can be the same as, or separate to, the registered office address. The principal place of business address is usually where the company is trading or operating, and where the correspondence from suppliers and customers regularly comes and goes.

Follow this link for more information about our Registered and Virtual Office Services.

If you would like to know more about setting up an Australian company, please see our fact sheet "Incorporating a Proprietary Company in Australia"

See our Resident Director and Registered Office pages for more information on CoSec's service offering

If you have any questions, please contact us or tweet us at @CosecConsulting.

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