Procedures for setting up a company in Australia

Australia is becoming an attractive destination for international businesses thanks to its stable economy, favorable business environment and great market potential. Australia’s geographical location in the heart of the Asia-Pacific region is a major advantage, facilitating market expansion and access to business partners in the region. The Australian government also has many preferential and supportive policies for foreign businesses, especially in the fields of high technology, research and development. Setting up a company in Australia will become easier and less time-consuming if investors understand the procedures for setting up a company in Australia. Viet An Law would like to present the procedures for establishing a company in Australia through the article below.

Prepare information to carry out the procedures for setting up a company in Australia

Choosing the right type of company and name

The two main types of businesses in Australia include:

• Pty Ltd (Proprietary Limited Company): Most popular for small and medium-sized businesses. Have a maximum of 50 shareholders (not employees), are not allowed to raise capital from the public. The liability of shareholders is limited to the contributed capital.
• Public Company (Ltd): Can have more than 50 shareholders, can be listed on the stock exchange and raise capital from the public. Requires stricter administration.

For most new or growing businesses, the Proprietary Limited Company (Pty Ltd) type is usually the optimal choice due to the limited liability mechanism for shareholders and a flexible management structure, suitable for up to 50 non-employee shareholders and no public fundraising.

After you have determined the type of company, you need to choose a name for your business. The company name needs to comply with ASIC regulations, not be confusing or offensive to others, and must clearly represent the legal type by ending in “Proprietary Limited” or “Pty Ltd”.

Appointment of directors and secretaries

Pty Ltd company is required to have at least one director, and most importantly, at least one of those directors must be a resident of Australia. In addition, under the new law, all individuals who take on the role of director must obtain a Director ID from the Australian Business Registration Service (ABRS) before being formally appointed and before the company is incorporated.

Although it is not mandatory for Pty Ltd, if a company secretary is appointed, this person must also be permanently resident in Australia.

Drafting the company’s charter

Before registering to establish a company, you need to draft the company’s charter. You can use one of the two ways below.

• Using Replaceable Rules:
  • This is a standard set of governance rules, pre-defined in the Enterprise Act 2001 and will automatically apply if the company does not have its own charter.
  • These rules deal with basic issues such as the powers and obligations of directors, how to hold meetings of the board of directors and shareholders, or the issuance/transfer of shares.
• Drafting of the Company Constitution:
  • The main purpose is to create a flexible set of rules for specific circumstances, separate agreements between shareholders, or specific operating structures (e.g., regulations on different types of shares, separate director appointment processes, internal dispute resolution mechanisms, etc.).

Procedures for setting up a company in Australia

Once you’ve completed all of the above preparations, the next step is to register your company with the Australian Securities and Investments Commission (ASIC). The application to be prepared includes the above information and you need to complete Form 201 (Application for registration as an Australian company).

Apply for company formation in Australia online

The online filing method through the ASIC Portal is a convenient and efficient way to make a variety of trades and submit various forms including company formation to the Australian Securities and Investments Commission (ASIC).

• Access the ASIC Portal: First, you need to go to the official ASIC website and go to the section dedicated to the Portal (called “ASIC Connect” or similar).
• Create an account on the ASIC Portal: If you don’t already have one, you’ll need to create a new one. After creating an account and confirming via email (if applicable), you can log in to the ASIC Portal to apply for company incorporation.
• Submit company incorporation documents: After logging in, you look for form 201 to submit company incorporation documents.

Apply for setting up a company in Australia through Service Providers (PSPs)

PSPs include registered agents, law firms, accounting firms, or companies specializing in business formation services. The units will prepare and submit electronic documents to ASIC on your behalf.

Note: For the incorporation profile components, you are required to obtain written consent from all nominees as directors, company secretary (if any), and shareholders. These documents confirm that they agree to take on the role or hold shares in the company.

Once ASIC has received a complete, valid application along with the corresponding fee, ASIC will proceed to process the application. If the application is approved, ASIC will proceed to issue a 9-digit Certificate of Registration and Australian Company Number (ACN). This ACN will be the official identifier for the company and must be shown on the company’s documents as prescribed.