Establishing a Company
Once you have considered all the options available to you and fully consulted with relevant professionals for advice, you may decide on running your business through a corporation.
While Companies have many advantages, they also have numerous legal obligations to deal with. Below we have summarised the key items ASIC, as corporate regulator, will require to from you in order to establish a company as well as some other important considerations for you to be aware of.
Things to do
1. Register the Company with ASIC
When a company is registered under the Corporations Act 2001 ('Act') it is automatically registered as an Australian company.
This means that it can conduct business throughout Australia without needing to register in individual State and Territory jurisdictions.
On registration, ASIC will:
- Give the company an ACN and register the company. A company comes into existence as a body corporate
at the beginning of the day on which ASIC register it and remains in existence until it is deregistered, and; - issue a Certificate of Registration. The company's name is the name specified on this certificate.
2. Business Name.
Businesses that are not companies (eg, sole traders and partnerships) are required to register their business name with the appropriate State/Territory authority. However, this is not necessary if the business is conducted under the name of the person or persons involved; that is, first name and surname, or initials and surname..
Registration or use of a business name:
- does not create a legal entity (only registering a company creates a legal entity) and
- does not allow the use of privileges to which a company is entitled, such as a corporate tax rate or limited liability.
A business name has no legal status.
If a company carries on a business in a name that is different to its company name, it must register the business name with the appropriate State/Territory authority.
A company name must indicate the company's legal status. A proprietary company must include the word 'Proprietary' or the abbreviation 'Pty' in its name.
A company must also indicate the liability of its members in its name:
- if the liability is limited, the company name must end with the word 'Limited' or the abbreviation 'Ltd'
- if there is no liability, the company must end its name with the words 'No liability' or the abbreviation 'N.L.'.
You can only choose a company name that is not already registered to a company or business. Also there is a list of words that you cannot use without special approval. These restrictions make sure that a company's name does not mislead people about its activities.
3. Internal management.
Before you lodge an application to register a company you must decide how the company will be internally managed. That is, you'll need to decide if its internal governance operates under:
- the replaceable rules in the Act (not applicable for sole director/shareholder proprietary companies – see special rules below). A company may take advantage of the replaceable rules in the Act to govern its internal management - it does not need to have a written constitution of its own. This means that companies choosing to be governed by the replaceable rules will not incur the expense of keeping their constitutions up to date with the law - even in the event that the replaceable rules are amended.
- its own constitution. The constitution of a private company must be kept with the company's records so it is available if required.
A proprietary company must comply with s112 and 113 of the Act which states that a proprietary company:
1. must be either limited by shares; or an unlimited company that has a share capital and
2. must have no more than 50 non-employee shareholders.
4. Consents.
Before applying to register a company you must get the written approval from people who agree to fill the following roles:
- director(s) (a director must be a person over the age of 18 years)
- secretary (a secretary must be a person over the age of 18 years)
- member(s) (every company must have at least one member).
- a combination of both.
You will also need to decide on the registered office details (need not be occupied by the company but by, for example, your solicitor or accountant) and the principal business office details.
5. Important Corporate obligations to be aware of:
- A company must display its name prominently at every place at which the company carries on business that is open to the public. A public company must also display its name and the words "registered office" prominently at its registered office.
- Use your Australian Company Number correctly. The company name, in legible characters, followed by the expression 'Australian Company Number' (or a permitted abbreviation) and the number itself must appear on:.
the common seal (if any) and every other seal of the company (if any) every public document issued, signed or published by, or on behalf of, the company every eligible negotiable instrument issued, signed or published by, or on behalf of, the company, and all documents required to be lodged with ASIC under the Act..
Related Client Services
- Register your Company with ASIC
- Register your Company name with ASIC
- Obtain TFN from ATO
- Provide a tailored Constitution
- Act as your registered Office
- Assist with professional websites / Company Stationery
