Thinking Of Opening An Australian Company?
Please check out our most commonly asked Australian company formation questions below.
[toggle title=”What are the general duties of Directors in accordance with Corporations Act 2001? “]
The Corporations Act 2001 requires that a company director or other officer exercise their powers and discharge their duties with care and diligence [s180]. This duty is subject to a business judgment rule that requires a director making a business judgment to:
- make the judgment in good faith and for a proper purpose;
- not to have a material personal interest in the subject matter of the judgment;
- inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; rationally believe that the judgment is in the best interests of the corporation.
In addition, directors and other officers of companies must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose [s.181]. They are prohibited from improperly using their position to gain an advantage for themselves or someone else or to cause detriment to the corporation [s182] and are prohibited from using information obtained as a consequence of their role with the company to gain an advantage for themselves or someone else or to cause detriment to the corporation. [s183]. These last two provisions also apply to employees of the company. All of the provisions give rise to civil obligations. They are also civil penalty provisions. In a case where a court determines that a civil penalty provision has been contravened, it must make a declaration to that effect and may order the person pay the Commonwealth a pecuniary penalty of up to 0,000 and may order the person compensate the company for any loss as a result of the contravention [Part 9.4B]. The court may also disqualify the person from managing corporations for a period the court considers appropriate [s206C].
The Corporations Act 2001 also sets out criminal offences where a director or other officer acts recklessly or is intentionally dishonestly in their failure to exercise their powers and discharge their duties in good faith and in the best interests of the company or for a proper person. Similarly, criminal offences are created where a person recklessly or intentionally dishonestly misuses their position or information they have gained through their position with the company [s184].
Directors have a duty to make full and frank disclosure of information within their knowledge to enable shareholders to make properly informed judgments on any matter [s191].
[toggle title=”GST “]
Goods and Services Tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. Registration for GST is compulsory for companies who turn over more than ,000 per annum. Once registered for GST, a company can charge GST on the products and services it provides and also claim back GST against expenses made for the business. Once you have formed your company you can apply for an ABN, TFN and GST.
[toggle title=”TFN (Tax Filing Number) “]
An Australian company will have its own Tax Filing Number (TFN) and it will be separate to your own individual TFN.
[toggle title=”ABN (Australian Business Number) “]
When you form a company you will be issued an ACN (Australian Company Number). Once you have this ACN you can then apply for an ABN. When you register for an Australian business number (ABN), your Australian Company Number (ACN) will be used to create your ABN. Your ABN is actually two check digits followed by the nine existing digits of your ACN.
[toggle title=”ASIC forms”]
A company must also complete a Statement of company details and pay an annual review fee. Within 2 weeks after a company’s annual review date (usually the date of registration), ASIC will send out a Statement of Company Details to the company. This statement will contain information about your company which you’ll need to confirm and make any changes if necessary.
[toggle title=”What the annual obligations for the company?”]
Being an Australian registered company carries with it obligations that must be met. If any details about your company change (directorships, registered office address, shareholding) then you’re required to notify ASIC about these changes. ASIC have a range of forms that you can use depending on what type of change has occurred.
[toggle title=”Can anybody be a director?”]
Generally yes, if the director is an Australian resident (permanent resident or citizen). There are however a few exceptions. A person cannot be a director if:
are an undischarged bankrupt
they have been convicted of an offence such as fraud
they are under the age of 18
[toggle title=”Who is responsible for the company?”]
Ultimate responsibility for the company lies with its directors. Directors are responsible for the day-to-day running of the company and ensuring its obligations with the Corporations Act 2001 are met.
[toggle title=”What is the main advantage of registering a company?”]
Shareholders of the company have limited liability towards the debts of the company. For instance if a shareholder has 50 shares in the company valued at module each, then the maximum liability for that shareholder is .
[toggle title=”Are there different types of companies?”]
There are two main types of companies in Australia, proprietry (private) and public companies. The most common type of company in Australia is the proprietary company (often signified by the "Pty" at the end of the company name).
[toggle title=”Company under Corporations Act 2001″]
A company is a legal entity and it is governed by the Corporations Act 2001. As it is a legal entity, it is separate from its own directors and shareholders. Companies are regulated by ASIC (Australian Securities & Investments Commission). Each company may have its own set of rules which can be laid out in its constitution. If a company does not have a constitution it goes by the "replaceable rules" of the Corporations Act 2001.