The following are some of the most frequently asked questions about companies:

Can companies conduct a business anywhere in Australia?

Companies registered under the Corporations Act 2001 (CA) can carry on a business anywhere in Australia and internationally.  Such companies include Australian incorporated companies and foreign companies registered under the CA.

Can companies trade under a different name to their own?

No.  If companies wish to trade under a different name, then the company must register that name as a business name in each state or territory in which they wish to trade.

Where can the registered office address be situated?

Any street address in any state of Australia can be the registered office address of a company.  The registered office cannot be a post office box address. 
Hopkins Corporate Solutions can provide the registered office address to companies.

What is the difference between Proprietary Companies and Public Companies?

Proprietary companies must:

– have no more than 50 non-employee shareholders; and

– not engage in any activity that would require disclosure to investors (e.g. prospectus) except for an offer of its shares to existing shareholders or employees of the company.

Public companies are companies that are not proprietary companies.

How many directors must an Australian Company have?

Proprietary companies:  The CA requires proprietary companies to have at least one director and at least one director must ordinarily reside in Australia.  The company’s constitution may specify a greater requirement.

Public Companies:  The CA requires public companies to have at least three directors, of which at least two directors must ordinarily reside in Australia.  The company’s constitution may specify a greater requirement.

Hopkins Corporate Solutions can provide Australian resident director services to companies.

Does an Australian Company need a resident director?

Proprietary companies:  Must have at least one Australian resident director (a director who ordinarily resides in Australia).

Public Companies:  Must have at least two Australian resident directors.

Foreign companies registered in Australia are not required to have any Australian resident director.

In which state should an Australian company be registered (incorporated)?

It is normally advisable to register a company in either Victoria, Queensland, Tasmania or Western Australia, as stamp duty is payable on share transfers in New South Wales, South Australia, Australian Capital Territory and Northern Territory. 
Companies registered in any state can carry on a business (trade) in any or all states in Australia and can have its registered office address anywhere in Australia.

Are there any minimum capital requirements to set up an Australian Company?

There are no specified minimum capital requirement.  If in doubt as to the amount of capital that may be required, it is easier to incorporate a new company with one share for which $1 is paid and then issue further capital at a later date.

Do Australian companies have Authorised Capital and par value for shares?

Australian companies do not have authorised capital or par value for shares.  These were eliminated from companies capital structures by statute in 1998.

Are Australian Company share structure details made available to the public?

The share structure for all Australian companies is on the public register maintained by the Australian Securities and Investments Commission (ASIC) .  Further, proprietary companies’ shareholders details are also available from ASIC.

Are Australian companies required to have a constitution?

No, they can use the Replaceable Rules within the Corporations Act 2001.  However, Hopkins Corporate Solutions recommends that companies adopt a constitution and not rely on the Replaceable Rules.

What happened to companies’ Memorandum and Articles of Association?

All Australian companies had Memorandum and Articles of Association until 30 June 1998.  With the passing of the Company Law Review Act 1998, effective from 1 July 1998 all companies Memorandum and Articles of Association were modified.  These modifications included the following major items:

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  • all references to nominal value (authorised capital) were deleted;
  • all references to par value were deleted;
  • concept of stock and the conversion of shares into stock was removed; and
  • the resultant Memorandum and Articles of Association after the changes was taken to be the Constitution of the Company.

Does an Australian Company need to prepare and file an annual financial report?

Public Companies must prepare and lodge (file) with the ASIC an audited financial report within four months of the end of each financial year (three months for a listed public company), except in certain circumstances where relief from this requirement is granted under certain ASIC Class Orders.

Small Proprietary Companies do not have to prepare or lodge a financial report, unless they are controlled by a foreign company and they are not consolidated into another financial report lodged with ASIC (though certain ASIC Class Orders can provide relief to some of these companies).

Large proprietary companies have to prepare and lodge an audited financial report within four months of the end of each financial year, except in certain circumstances where relief from this requirement is granted under certain ASIC Class Orders.

When can Dividends be paid?

The Corporations Act 2001 states that dividends can be declared when:

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  • a company’s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend; and
  • the payment of the dividend is fair and reasonable to the company’s shareholders as a whole; and
  • the payment of the dividend does not materially prejudice the company’s ability to pay its creditors.

Assets and liabilities for the above tests are to be calculated in accordance with accounting standards in force at the relevant time.

Who can be appointed as a Local Agent of a foreign company?

The Local Agent of a foreign company can be either a person normally residing in Australia or an Australian company.

Please Contact Us for further information regarding any of the above or any questions that you may have regarding companies in general.