Companies are relatively easy to establish in Australia, although overseas owners need to meet certain regulatory requirements, such as having a resident director, and there may be tax requirements to meet where a local subsidiary is to trade using loans from its offshore parent company.
Private or proprietary companies are the most common type of company and can have from 1 to 50 shareholders. If a company is not owned by family members but has a number of unrelated shareholders or investors, it is common for the parties to sign a Shareholders Agreement to set out how they will operate the company and what happens if a shareholder wants to sell their shares.
If you intend to use a company as your business entity, we recommend you have a Shareholders’ Agreement prepared which is tailored for your needs and covers a range of important issues which are not covered by the company’s Constitution. For more information, see our detailed paper on Shareholders’ Agreements.
Public companies normally have a larger number of shareholders and are listed on the stock exchange.
Different regulatory requirements apply for public companies and large proprietary companies, although all companies are governed by the Corporations Act and must lodge documents and annual statements with the corporations regulator (‘ASIC – the Australian Securities & Investment Commission).
For expert help with companies, contact Lachlan Hespe, Senior Associate, Business Law work.