Starting a business in Australia requires having an in-depth understanding of the relevant regulatory framework. Australian companies, particularly ASX-listed ones, must ensure compliance with numerous regulations & requirements So, let’s take a look at what it takes to open a business in Australia & what criteria foreign investors must meet to ensure that Australian company registration goes off smoothly & by the book.
BoD
Normally, Australian companies are governed by a BoD composed of independent directors. There’s specific ASX guidelines on selecting & appointing directors, as well as the chairman’s role.
Usually, incorporating a company in Australia involves putting together a board committee. It has to look into & assess possible risks connected to regulatory compliance, remuneration & appointments. Normally, directors of registered & non-registered companies can delegate some or all of their powers to other directors, committees of directors, personnel or any other individuals.
Directors’ Duties
Directors must:
- act honestly & diligently;
- act in the their companies’ best interests;
- refrain from misusing information about their position;
- refrain from pursuing their own interests & avoiding conflicts of interest.
Directors are also responsible for timely financial reporting. If their company is experiencing financial hardships, they may assume additional responsibilities. Non-fulfilment of duties is punishable by fines, imprisonment, or both.
Auditors
Opening a company in Australia requires appointing independent auditors; the only exception is privately owned small companies limited by their guarantees. Incorporated companies must have audit committees made up of only non-executive & independent directors.
Reporting
Preparing & submitting annual or semi-annual financial statements is a requirement all listed companies must comply with. The only exception to that rule is privately owned small companies limited by their guarantees (unless they’re controlled from abroad on an annual or semi-annual basis). Directors are responsible for the accuracy of the reports & their compliance with accounting standards & rules for registration of a company in Australia.
Insider Trading
Insider trading in securities, as well as other investment & financial products, is prohibited. Starting a company in Australia requires compliance with strict rules for transactions involving 3rd parties, especially if they’re conducted by state-owned enterprises. Unless transactions are concluded under normal terms, shareholder approval is required.
Senior management personnel may not trade in their companies’ securities/financial products during prohibited periods (i.e. before submittance of annual/semi-annual financial statements & before the AGM). Directors are prohibited from withholding any information pertaining to trading in their companies’ securities on the ASE. In their turn, stock market operators must report any suspicious transactions to relevant regulators.
Insolvency
To be able to register a company in Australia, one must comply with very stringent bankruptcy laws. Directors are considered to have committed a breach if:
- their company takes out a loan while being bankrupt or goes bankrupt due to being unable to pay off its debts;
- there’s reasons to believe that their company is bankrupt or will go bankrupt.
To avoid the above, directors should regularly assess their companies’ solvency & seek professional advice, if circumstances require them to.
Considering launching a business in Australia? Need advice on registering a company in Australia? Consider contacting IQ Decision UK. Our team of advisors is always on standby to lend you a hand with any challenges you may encounter in that regard.
