This guide highlights the corporate compliance requirements for Australian companies.
To comply with Australia’s laws and regulations, companies must follow compliance requirements that apply to the different stages of incorporating a company, both pre-registration and post-registration.
Let’s find out what they are.
Company set up requirements in Australia
Company and business name
A register of Australian company and business names is maintained by the corporate regulator, Australian Securities and Investments Commission (ASIC). A simple name search can be undertaken on their website.
Proprietary limited (Pty Ltd) companies must have at least one Australian resident as a director. Public companies (ending in Limited or Ltd) must have two directors who are Australian residents.
In summary, Section 201B of the Corporations Act 2001 states that a director can be any individual who:
- Is at least 18 years of age
- Is not disqualified from managing corporations unless leave is granted by ASIC (under s206F(5)) or by a court (under s206G)
Disclosing personal details of directors
A company must inform the ASIC of the name, date of birth and current residential address of the directors.
A company must keep an up-to-date register of members and officeholders and minutes of meetings, including circulating resolutions.
All Australian companies need a registered office.
This is the company’s official address where correspondence is sent from the ASIC, the Australian Taxation Office (ATO), and other regulatory bodies. It is also used for the legal service of documents.
The registered office address does not have to be the same as the address where the company conducts business – it is often located at the offices of lawyers, accountants, or Acclime.
Principal place of business
The principal place of business address is the operating or trading location of the business.
This can be the same as, or separate from, the registered office address. It is usually where the company is trading or operating and where the correspondence to and from suppliers and customers is regularly sent.
Number of shares
There is no minimum number of shares that needs to be issued in a company.
Consideration should be given to matters including:
- Whether the company intends to raise further capital and at what price
- How many shareholders there are
- How much share capital will be paid into the company on incorporation. For example, if you issue 1 million shares at AUD 1.00 on incorporation, the company expects to be receiving a capital injection of AUD 1 million.
A company will be governed by:
- The replaceable rules
- A constitution
- A combination of both
The following companies must be governed by a constitution:
- ‘No Liability’ public companies
- Special purpose companies
If a company does not adopt a constitution, it can use the Replaceable Rules instead. Replaceable Rules appear in the Corporations Act and provide basic rules for governing a company.
Replaceable Rules do not apply where a company’s sole director and sole shareholder is the same person.
A detailed article showing the interaction between the constitution and the replaceable rules appears on the ASIC website.
A public officer is a company’s representative of the ATO and is responsible for the company’s obligations under section 252 of the Income Tax Assessment Act 1936.
The public officer of a company is the person the ATO normally deals with in relation to the entity’s tax affairs, such as record keeping and submitting company returns.
A public officer must be an individual who meets all the following criteria:
- Is 18 years old or over
- Ordinarily resides in Australia
- Understands the nature of the appointment
Tax file number
A tax file number (TFN) is obtained at the same time as an Australian Business Number (ABN), using the same application form. This can be done through the Australian Business Register (ABR).
Australian company number
Upon registration of your company, it will be issued with a unique, nine-digit number. This is an Australian Company Number (ACN) and must be displayed on all company documents.
Australian business number
An ABN is a unique number used to identify business names and companies and various tax and other business purposes. Issued by the ABR, an ABN is generally comprised of your ACN with a two-digit prefix.
With an ABN, you can:
- Confirm your business identity to others when ordering and invoicing
- Avoid Pay as You Go (PAYG) tax on payments you receive
- Claim Goods and Services Tax (GST) credits
- Obtain an Australian domain name
Australian registered body number
An Australian Registered Body Number (ARBN) is a unique, nine-digit number allocated by ASIC when a body is registered with them other than as a company. Foreign companies wishing to register with ASIC will receive an ARBN instead of an ACN.
A body that has been issued with an ARBN can apply for an ABN.
Display of company name and Australian company number
A company must display its name at every place the company carries on business and is open to the public. A public company must also display its name with the words registered office at its registered office.
The company’s name and ACN must be displayed on the first page of the documents.
The ACN must be displayed in the following:
- Documents lodged with the ASIC
- Statements of account, including invoices and quotes
- Receipts (not machine-generated)
- Business letterheads
- Official company notices
- Cheques, promissory notes and bills of exchange
- Written advertisements making a special offer
If a company has an ABN, it can be used in place of the ACN.
Business licenses and permits
You will need specific business licenses and permits for certain business activities in Australia.
The types of licenses and permits you need to apply for depend on:
- Business type
- Business activity
Ongoing business compliance requirements for companies in Australia
Notification of changes
Companies must notify ASIC if the following changes are made:
- Company name (within 14 days of the change)
- Company details, e.g., registered office or principal place of business (within 28 days of the change, or 14 days in the case of public companies)
- Company constitution (within 28 days of the change)
- Directors’ details: names, addresses, new appointments or resignations (within 28 days of the change)
- Share structure or shareholder details (usually within 28 days of the change)
Annual general meeting
A public company must hold an annual general meeting at least once every year and within five months after the end of its financial year.
Accounting and tax compliance requirements for companies in Australia
Keeping financial records
A company must keep up-to-date financial records that correctly record and explain the company’s financial position. Larger companies have additional obligations to lodge financial reports with the ASIC.
The ASIC requires companies to keep financial records for seven years.
The financial records consist of:
- Statement of profit or loss
- Statement of financial position (balance sheet)
- Statement of changes in equity
- Statement of cash flow
Annual financial reports
For a large proprietary company, it must prepare annual financial reports that are:
- Prepared in accordance with Chapter 2M of the Corporations Act 2001
- Lodged with ASIC within four months of the financial year-end
- Sent to members within four months of the financial year-end
Date of the financial year-end
The financial year in Australia starts on 1 July and ends on 30 June of the following year.
Appointment of an auditor
According to the Corporations Act, directors of a proprietary company may appoint an auditor if the company has not appointed the auditor in a general meeting.
Public companies must appoint an auditor within one month after the day the company is registered unless the company has appointed an auditor at the general meeting.
Income tax return
Individuals and businesses must submit their tax returns to the ATO from 1 July to 31 October.
Employment law requirements
Full time and part-time employees in Australia are entitled to four weeks of annual leave. Employees who work in shifts are entitled to five weeks of annual leave.
Sick and carer’s leave
Sick and carer’s leave allows employees to leave when the employee is sick or injured and when a family member is injured or needs help during emergencies.
The entitled paid sick and carer’s leave in Australia is 10 days for full-time employees and pro-rata for part-time employees.
Family and domestic violence leave
All employees, including casual and part-time employees, are entitled to five days of unpaid family and domestic violence leave every year.
Employees may take family and domestic violence leave to deal with the following:
- Attending court hearings
- Accessing police services
- Making arrangements for safety, such as relocation
Compassionate and bereavement leave
All employees, including casual employees, are entitled to two days of compassionate leave when a family member dies or suffers a life-threatening injury or illness.
Maternity and parental leave
Employees are entitled to up to 12 months of unpaid parental leave and can request an additional 12 months of leave.
Employees can also get Parental Leave Pay (PLP), which is funded by the Australian government, and paid parental leave from the employer. Employees who receive PLP will still be entitled to unpaid parental leave.
Employees can get up to 18 weeks of PLP paid at the national minimum wage, and employees can claim PLP for one set period and one flexible period.
First period – set PLP:
- Entitled to a set period of 12 weeks
- Must be used in one continuous period within 12 months of the birth or adoption of a child
Second period – flexible PLP:
- Entitled up to 30 days of flexible PLP
- Has to be used within 24 months of the birth or adoption of a child
- Starts after the first-period ends
- Can be taken in flexible periods as negotiated by the employer and employee
It is important that you complete and meet all the corporate compliance requirements for Australian companies. To help ensure you stay compliant, we recommend engaging with Acclime’s services.