Foreign companies that intend to carry on business in Australia are required to register under the Corporations Act 2001 (Cth) (“the Act”). This article looks at the obligations of foreign companies who intend to operate in Australia through an offshore entity, rather than a local subsidiary.
Is the Foreign Company ‘Carrying on Business’?
Foreign companies that do not meet the ‘carrying on business’ threshold in section 21(2) of the Act may not need to register. It is therefore necessary to consider the specific nature of your intended Australian business activities. At common law, courts have interpreted the threshold as a ‘systematic and regular carrying on of business with a view to profit.’ Foreign companies that merely seek to invest funds, collect debts or hold property will generally not be required to register.
Registration
If a foreign company is deemed to be ‘carrying on business,’ it is required to register with ASIC in the proscribed form detailed under the Act. Amongst other requirements, the application must include:
- A certified copy of a current certificate of incorporation or registration in its place of origin;
- A certified copy of its constitution;
- A list of its directors (including personal details);
- The address of its registered office in its place of origin;
- The address of its registered office in Australia.
Upon completion of the application, ASIC is required to issue the company with an Australian Registered Body Number (‘ARBN’) and enter its name into the Foreign Company Register. A certificate of registration will then be issued.
Registration of an Australian Office
A foreign company must register an office in Australia. The nominated office can be the office of another person or body corporate (including an accountant / solicitor). The foreign company need not physically occupy the premises listed.
Appointment of a Local Agent
In order for a foreign company to register in Australia, at least one local agent must be appointed. The local agent must be a natural person or a company resident in Australia, authorised to accept service of notices on behalf of the company. A local agent may be personally liable if the company breaches the Act.
Accordingly, a foreign company must lodge with its application for registration:
- A memorandum of agent appointment (ASIC Form 418);and
- A written statement made by the local agent when registering under the Act (Companies Form 402).
Obligations Post Registration
A foreign company must lodge financial documents with ASIC at least once every calendar year. Amongst other requirements, lodgment must include:
- A copy of its balance-sheet made up at the end of its last financial year;
- A copy of its cash flow statement for its last financial year;
- A copy of its profit and loss statement for its last financial year; and
- A statement in writing in the prescribed form verifying that the copies are true copies of the documents required.
If you are responsible for a foreign company seeking to carry on business in Australia, it is important to seek expert legal advice prior to selecting which corporate structure to adopt. Please contact our office for advice regarding company registration.