Before you register a company, you should decide if the company structure suits your needs or if a different business structure is preferable. A company is a legal entity with certain rights and obligations. It is separate to the individuals who run it and includes privileges such as corporate tax rates or limited liability.
1. ASIC Application Form
There are two ways to initially set up a company. You can start the process yourself by using the ASIC Form 201 and by paying the ASIC company fee. As the paper form is no longer available, Australian company registrations must be completed online. Another way to go about it is using a service provider that can deal directly with ASIC. However, this involves paying the service provider as well as the ASIC company fee.
2. Choosing a Company Name
You must choose a name that is not identical to an existing company or business name. Use ASIC’s name availability search to see if the name you would like is available. Prior to May 2012, multiple businesses with the same name could exist provided they were registered in different states and territories. This is no longer possible with ASIC’s national register. Although, in some cases you may be able to register an identical name for the company if you are the holder of that identical name.
Some further considerations:
- Certain words and phrases are restricted from being used as a company name. Examples of these include ‘bank’, ‘Royal’, ‘trust’ and ‘Incorporated’. These terms may be used with the approval of a government minister.
- You cannot use words that could mislead people about a company’s business.
- ASIC may also reject a name if it is found to be offensive or indicative of illegal activity.
- Verify that there are no similar names or trademarks that may affect your name.
- A company’s name must show its legal status. For example, if a company’s members’ liability is limited to the amount unpaid on their shares, the name must include ‘proprietary limited’ at the end.
3. Decide how your company will operate
You will need to decide how your company will operate before registering it with ASIC. A few common ways to govern your company include:
Replaceable rules are a basic set of rules in the Corporations Act for managing your company. A company that doesn’t want a constitution can use these rules instead. The benefit of replaceable rules is that you do not have to continually update a written constitution to reflect changes to the law.
A company can adopt a written constitution before or after registration, instead of using the replaceable rules. The constitution can be changed or repealed by a special resolution. Certain companies must have a constitution. These include ‘no liability’ public companies and ‘special purpose companies’ that want a reduced annual review fee. A proprietary company must have a constitution, but it does not have to lodge a copy with ASIC. A record of the constitution must be kept by the company and a current copy provided to any member who requests it within seven days.
Combination of Replaceable Rules and a Constitution
A company may also have a combination of replaceable rules and a written constitution. A proprietary company with a sole director or member does not need to follow replaceable rules or have a constitution.
4. Know your obligations as an officeholder
All company directors are also officeholders with responsibility for the day-to-day operations of the company. The obligations of an officeholder include:
- Ensuring company details are kept updated.
- Maintaining company records and details on the register.
- Paying required lodgment fees and annual review fees.
The requirements an officeholder must follow are in the Corporations Act.
5. Choose your shareholders and directors
A company’s directors are the people who control the company. At least one director and secretary of a proprietary company must reside in Australia. Also, at least two directors of a public company must reside in Australia.
After choosing your shareholders (or the company’s members), you must decide how many shares they will own each and what class of shares they will own.
It is also a requirement to obtain written consent from people in these roles:
- A director (must be over 18);
- A secretary (must be over 18); and
- A member (every company must have at least one member).
6. Registering Your Company in a State/Territory
Your company must be registered in a state or territory of Australia. It may also be necessary to register for GST.
7. Final Steps
A company must choose a principal place of business and registered office. If your registered office address does not belong to the company, ensure you get written permission to use the address.
Once ASIC has processed your application, it will:
- Provide the company with an ACN (which you can use to apply for an ABN);
- Register the company; and
- Send you a certificate of registration.
Following registration of your company, ensure:
- The company’s name is on display wherever the company does its business and is open to the public;
- The company’s ACN/ABN is visible on any documents published by the company; and
- The company’s details are kept up to date.
Registering a company in Australia is not too hard, but you should do some planning and go through these steps. If you would like assistance with registering a company, call OpenLegal on 1300 337 997 or fill out the form on this page.