Australia is a federal country made up of six states two territories on the mainland and seven extraterritories and has around 25 million. Its federal administration is situated in Canberra, which is the capital city. Canberra but most (over 70%) of Australians reside in major cities along Australia’s coast.
Australian law on company provides a myriad of opportunities to invest in Australia. We’ve put together the top ten aspects of Australian company law that are relevant to foreign investors. Take a look at the abbreviated version below to get a clear understanding of the complexities of 澳大利亚 公司 法 currently.
1. Regulative Scheme
The Corporations Act 2001 regulates companies and their incorporation, as well as the acquisition of securities, shares and the derivatives sector.
The Corporations Act, together with other important pieces of legislation create a common regulation scheme for businesses that is applicable to all Australian states and territories.
2. Australian Securities and Investments Commission (ASIC)
The Australian Securities and Investments Commission (ASIC) is an Australian federal agency that is responsible for the administration of the Corporations Act and has a vast array of powers. It acts as a regulator and enforcer . It is also the main register and source of information for corporate issues.
ASIC has broad investigative powers in the Australian Securities and Investments Commissions Act to identify the underlying misconduct, collect evidence to initiate criminal proceedings, stop illegal behavior and commence civil proceedings against those who violate the Corporations Act.
3. “Incorporation” (or “registration”)
A business has its own legal entity from its directors and shareholders. It may have its own property, sign contracts, and initiate legal proceedings under their own names. This is the most commonly used kind of business entity in Australia.
Companies are formed in accordance with the Corporations Act which involves appointing directors (one of which must be a resident of Australia) as well as issuing shares, naming an office registered in Australia and registering copies of the constitution of the company with ASIC (although it exists no legal requirement that companies having a constitution except if it’s a publicly-listed firm or founded for a particular reason).
If a company is registered with ASIC the company will receive an individual number of nine digits. Australian Company Number (ACN) which is required to be included on the company’s publicly available documents (unless the business has the Australian Business Number (ABN) which is comprised of the company’s ACN and in that case, it is able to display its ABN in place of an ACN. Foreign companies as well as other entities that must be registered pursuant to the Corporations Act also receive identification numbers referred to under the name of”the Australia Registered Body Number (ARBN).
4. Different types of companies
The two primary kinds of corporations covered under the Corporations Act are public and proprietary companies that are limited by shares. Both require an office registered in Australia in which communications is possible and the case is an open company the registered office needs to be accessible for public access. Every company must be led by the designation of a “public official” who is accountable to fulfill the duties required by Australian tax law. A director of a company, as well as the public officer of a business as well as the secretary of a publicly traded corporation must reside in Australia (however it is possible that the same person can fulfill both roles simultaneously).
Public Company
A public company can sell its stock for subscription or sale to the public , and there is no limit in the exchange of shares. It must be governed by at least three directors, not less than two of which are resident in Australia and also at the very least one shareholder. It is not required for a public corporation to list with the Australian Stock Exchange (ASX) however it must have the Annual General Meeting (of the shareholders) at least once in the calendar year, and within five months after the end of the financial year , in which the audited financial statement of the business along with the director’s reports must be made available.
Proprietary Company
Created for a small number of shareholders (not over fifty non-employee shareholders) A proprietary company may impose restrictions on the selling of its shares. It is the most popular type of business in Australia.
It should have at minimum one director and one shareholder (who could comprise the same entity) and must have at least one director that lives in Australia.
Proprietary firms are classified as small or large-sized proprietary firms The latter is eligible for reduced reporting requirements on financials when it meets at minimum two of the following requirements:
The company , as well as the companies it manages should be able to report a consolidated operating gross revenue that is not more than $25 million in the year of financial reporting;
The amount of its gross assets consolidated and its assets from any other entities that it is the owner of If any, is not more than $12.5 million at the close of the fiscal year;
The business and the entities it manages are, if applicable, with less than 50 employees at the close of the fiscal year.
5. Directors and Officers
Control and management of the business are placed with the board of directors and are appointed by the shareholders. Directors and others who act as directors, like managers have a duty to the company and shareholders certain obligations that result from the general law and that is, under the Corporations Act and other legislation. It is vital to understand that even if an individual is not legally appointed director, they can be considered to be one when they perform their duties as if they were a director, or if the board acts generally according to their directives. The obligations directors and officers have to perform to the Corporations Act are:
to act with the care and vigilance of a responsible person;
To do so in good faith and to serve an appropriate purpose;
To avoid conflicts of interests;
To prevent improper use of position
To ensure that you do not misuse data;
To prevent insolvent trade to avoid insolvency
to provide or divulge certain information, such as financial informationto its shareholders.
Infractions to these rules can result in grave consequences, including exposing directors to personal or criminal financial responsibility, or in some cases, both.
6. Recording Requirements for Reporting and records
The amount of reporting requirements is contingent upon the size and the activities of the business and whether it is an entity that reports. Businesses that conduct business in Australia have a variety of obligations to:
Maintain various records and different registers pertaining to their actions
Make sure that their accounts are in compliance with accounting principles that are generally accepted and that are consistently followed throughout Australia
Make the annual financial statement and annual reports and give copies to shareholders
Make copies of the statements to ASIC and If relevant If applicable, ASIC and, if applicable, the Australian Stock Exchange (ASX)
In certain situations, you can prepare consolidated financial statements that cover the financial aspects of a particular group of businesses
Request the production of director reports on the performance of the company.
Some companies are their accounts regularly audited through an auditing firm that is resident of Australia
Inform about significant issues that affect their performance or future prospects with ASIC as well, where appropriate the ASX.
7. Australian Stock Exchange (ASX)
Public companies are able to obtain money from the public via trading on the ASX which is also available for companies that are incorporated abroad. The ASX offers shares of companies that are public and allows trading in those shares.
Listing is an expensive procedure and businesses must satisfy certain stringent financial standards laid by the ASX Listing Rules, as in addition to meeting the complete ongoing reporting requirements as well as additional requirements under the Corporations Act. A thorough prospectus should be provided to investors that describe the company’s position and its future plans.
The company should have at least 300 non-affiliated security owners with holdings worth an amount of at least $2,000 per as well as a free floating of at least 20 percent. The company must also satisfy one or more of the following requirements:
Test of profit ($1 million in aggregated profits from ongoing operations during the last three years, and $500,000 of consolidated profit from continuing operations during the past 12 months
or
The test of assets ($4 million of net tangible assets, or an estimated total market cap of $15million)
8. Crowd-Sourced Financing
Australia has recently passed legislation that permits (eligible) small and start-up business enterprises to raise capital through offering securities to a significant amount of investors without prospectus.
9. Managed Investment Schemes
Managed investment plans that are regulated under the Corporations Act are defined to encompass any arrangement in which an operator is responsible for managing an investment which is managed by at least one or more passive investors apart from issues of securities or shares within the course of a business.
In order to register a managed-investment scheme, the administrator or administrator must belong to an Australian public corporation that holds the Australian financial services license, which permits it to run the scheme that is registered. There is a significant cost to set up the registration, registration and operation of a managed investment scheme that is licensed and the constitution of the operator must contain adequate provisions for the requirements set out by the Corporations Act and have a compliance plan describing the procedures that have to be implemented to ensure that the scheme is in compliance. There are a few exemptions from the rules of scheme for smaller-scale schemes, or for schemes which only have advanced investors, however, the exemptions come with strict restrictions on their application.
10. Acquisition of Businesses
An enterprise can be purchased through two main methods (each of that has its own benefits):
The company’s assets may be acquired (in which case , the company itself is not being acquired) It can also be sold
Shares of the corporation that controls the business can be purchased.
Rules that are complicated apply to public businesses. For example, special take-over laws will apply after a person has purchased 20 percent of the shares in:
A listed company or
A company that is not listed and has over fifty employees.
Additionally the taxation and the consequences of stamp duty must be taken into consideration, and not in certain jurisdictions, the stamp tax (which is a tax imposed by the state) is simply referred to as duty.
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