Using an Australian business for immigration purposes – considerations when setting up and operating a company
Australia offers excellent opportunities for foreign investors and business operators, and generally welcomes economic growth and development. If you are not an Australian citizen or permanent resident, you will need to obtain the right visa to set up a business in Australia.
If you have a business background and meet specific eligibility criteria, you may be able to pursue a Business Innovation visa. Applications in these categories are complex, require careful planning and detailed supporting documents. Using an immigration specialist to assess your eligibility and coordinate the process can avoid costly mistakes.
Potential applicants will also need to consider how to formally set up their business in Australia. A proprietary limited company is a popular structure as it creates a separate legal entity that can trade, hold assets and enter into legal contracts in its own right. This article explains how to set up a company, the legal obligations of company officers and other important considerations when owning and operating a business in Australia.
Registering a company
The Corporations Act 2001 (Cth) sets out the framework for the registration and conduct of companies in Australia. The Australian Securities and Investment Commission (ASIC) oversees the registration and conduct of companies.
A company requires at least one director and one shareholder (who may be the same person). At least one director must ordinarily reside in Australia.
A director must be a natural person who is at least 18 years old, and not an undischarged bankrupt or subject to a personal insolvency agreement that has not been complied with. They must not, within the past five years, have been convicted of an offence of dishonesty such as fraud or a company law offence such as insolvent trading.
A shareholder may include a person, another company, a trust, an incorporated association or partnership.
A company secretary may be appointed and if the company has only one director, that person can take on both roles.
A public officer must be appointed and is responsible for ensuring the company complies with its taxation and reporting obligations.
The company must nominate a physical address in Australia as its registered office for service of legal documents or notices. This is often the premises of the company’s accountant or law firm but can be a personal residence.
Once registered, the company acquires a unique 9-digit Australian Company Number (ACN) which is used for identification and reporting purposes and must be displayed on all formal or public documents, cheques and at the company’s place of business.
Registering with the Australian Taxation Office (ATO)
Companies must apply to the ATO for a Tax File Number (TFN) which is used when filing annual company tax returns. The company should also register for an Australian Business Number (ABN) under the Australian tax system.
The company may also need to register for Goods and Services Tax (GST), Pay-As-You-Go (PAYG) withholding tax and other types of taxes.
Directors’ duties and obligations
Registering a proprietary limited company provides some level of personal asset protection for its members. However, certain conduct may result in company directors being legally liable for their actions and the debts of the company.
Directors have an overriding duty to act in the best interests of the company and owe various other duties to the company and its shareholders. These include:
- a duty of good faith – to act honestly, for the company’s benefit and not use their position for personal gain;
- a duty of care, skill and diligence – to exercise a reasonable level of skill in managing the company;
- a duty to avoid conflicts of interest and misuse of information or position – directors filling other roles or with other business interests must be careful to avoid a conflict which disadvantages the company they represent;
- a duty to prevent insolvent trading – directors may be personally liable if they allow a company to continue incurring debt when it is reasonably foreseeable that the company is, or likely to become, insolvent;
- a duty to retain discretion and not to disclose confidential information.
Company names, business names and trade marks
Choosing a company name and its ‘branding’ is an important part of your enterprise. Generally, a company name cannot be identical to an existing company or business name unless the identical name is owned by the individual, company director or company proposing to register it. Business and company name availability checks can be made on ASIC’s register.
Other restrictions apply when registering a company or business name. Names that may be misleading, such as ‘university’, ‘bank’ or ‘royal’ generally may not form part of the company name, and names considered offensive or that are suggestive of an illegal activity are prohibited.
Business and company names can be reserved, generally for two months, through ASIC prior to registering the company.
A company name must show its legal status – for example a proprietary limited company must state its’ name ‘ABC’ followed by ‘Pty Ltd’. The company may register a business name (in addition to its company name) which can be used for trading purposes, for example ‘ABC Pty Ltd’ may register the business name ‘ABC Learning Systems’ which can be used for marketing and advertising.
When registering a business name, directors should check the IP Australia website for identical or similar names or trade marks to avoid copyright action being taken by another company for passing off or infringement. IP Australia is responsible for administering intellectual property rights and laws regarding patents, trade marks, registered designs and plant breeder’s rights.
The Fair Work Act 2009 (Cth) is the main legislation regulating the relationship between employers and employees and sets out various obligations with which an employer must comply. Occupational health and safety and workers compensation laws also apply across various jurisdictions.
Companies and their officers may need to obtain licences, permits or approvals to run their business activities which may be subject to specific standards and codes of practice. Government and industry bodies provide detailed information about licensing and requirements specific to an industry or occupation.
If you are using an Australian business for immigration purposes, it is important to understand the rules and requirements for conducting its activities. Working with a legal professional and accountant will help meet your legal and financial reporting obligations and ensure compliance with Australian laws and visa conditions.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 9955 6692 or email [email protected].