Foreign Investment in Australia

On the night of the Liberal Party'€™s most recent election victory in September 2013, now former Prime Minister Tony Abbott declared Australia "€œopen for business"€. Since that time, Australia has signed trade agreements with:

  • Korea - Korea-Australia Free Trade Agreement (KAFTA) - on 8 April 2014;
  • Japan - Japan-Australia Economic Partnership Agreement (JAEPA) - on 8 July 2014;
  • China - China-Australia Free Trade Agreement (ChAFTA) - on 17 June 2015, and
  • most recently the Trans-Pacific Partnership Agreement (TPPA) that is to include various preferential trade terms for 11 Pacific-rim nations in October 2015.

Add to this to previous trade agreements in place that give more than half the world'€™s population access to the Australian market, and you can most definitely say that Australia is "open for business"€.

To assist global clients looking for strategic and commercial solutions to all of their inbound advisory needs, Hicksons established a Foreign Investment in Australia practice that draws on the expertise and experience of partners and senior lawyers from our Commercial, Property, Employment and Insurance practice groups and our Trade, Transport, Tourism and Aged Care sector groups who collectively offer clients a full service capability and have a detailed understanding of the regulatory and business environment to meet all of their needs.


Carrying on business in Australia


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The main ways a foreign company can conduct business in Australia are by establishing a branch office or subsidiary. The most suitable structure will be determined by the foreign company'€™s business objectives. Here we describe some of the salient features of branch offices and subsidiaries.


Branch offices

A foreign company that carries on business in Australia must be registered. There are various tests to determine if a foreign company is carrying on business in Australia.

The first test is whether they have a place of business in Australia. This is not the only requirement. A foreign company may be carrying on business in Australia even though it does not have a place of business. To carry on business necessarily implies conduct which is continuous and systematic. Other indicia include:

  • establishing or using a share transfer or share registration office; or
  • administering, managing or otherwise dealing with property situated in Australia as an agent, legal personal representative, or trustee whether by employees or agents or otherwise. An application for registration must be lodged with the corporate regulator the Australian Securities and Investments Commission (ASIC). Failure to register is a strict liability offence and could result in fines by ASIC and the courts.
To be registered a foreign company must appoint a local agent. The local agent must be a person who or company that is a resident in Australia and is authorised to accept service of process and notices on behalf of the foreign company. Under the Corporations Act, the local agent is personally liable for all the obligations of the foreign company.

Once registered, a foreign company will be given an Australian Registered Body Number (ARBN). This number must be printed on all of the companys public documents and negotiable instruments. The foreign company must have a registered office in Australia.

Registered foreign companies must lodge financial statements with ASIC once a year including balance sheet, cash flow statement and profit and loss statement.


Subsidiaries

There are various types of companies that can be registered with ASIC:

  • a private or proprietary company;
  • a public company limited by shares;
  • a public company limited by guarantee; and
  • a public company unlimited with share capital or with no liability (mining companies only).
The most common is a proprietary company limited by shares followed by a public company limited by shares.

A company must have at least one member (shareholder). Proprietary companies may not have more than 50 non-employee shareholders. There is no limit to the number of members that a public company can have. There is no minimum capital requirement.

A proprietary company must have at least one director who is ordinarily resident in Australia. Proprietary companies are not required to have a company secretary. A public company must have at least three directors, at least two of whom must be ordinarily resident in Australia. Public companies are required to have at least one company secretary. Any company that has a company secretary must have at least one company secretary who is ordinarily resident in Australia.

Proprietary companies are divided into €œsmall€ and €œlarge€ proprietary companies. A proprietary company will be classified as a small proprietary company for a financial year if any two of the following three criteria are met:

  • the consolidated revenue of the company and any entities it controls is less than A$25 million;
  • the gross assets of the company and any entities it controls is less than A$12.5 million; and
  • the company and any entities it controls have fewer than 50 employees.
Any proprietary company which cannot be classified as a small proprietary company will be classified as a large proprietary company.

Public companies and large proprietary companies must lodge an audited financial report and a directors report for each financial year with ASIC and send them to shareholders within four months of the end of the financial year. Small proprietary companies are usually not required to lodge an audited financial report with some exceptions. Small proprietary companies that are controlled by a foreign company are generally required to lodge an audited financial report.


Our team of lawyers can provide assistance in relation to your:

  • foreign investment in Australian property advice €“including how best to structure both your commercial and residential property transactions
  • foreign direct investment issues
  • mergers and acquisitions, including share purchases, asset purchase, joint ventures, alliances and partnerships
  • trade practices and competition law issues
  • corporate finance
  • private equity
  • capital markets, both debt and equity
  • banking and finance, and
  • employment law issues.

We are also able to allocate native Mandarin, Cantonese, Korean and Bahasa Indonesian language speaking solicitors and support staff to assist you.

 

Practice Manager

David Fischl

t +61 2 9293 5413
f +61 2 9264 4790
e david.fischl@hicksons.com.au

 

Foreign Investment in Australia