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ASIC Compliance:

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There are a number of issues in operating a business in Australia, one of  them being the compliance requirements imposed by ASIC. When we register an Australian company, registration occurs nationally through ASIC without needing to register in individual states and territories. There are various procedures and obligations imposed by ASIC which are essential and mandatory to own, run and operate a business in Australia. An experienced Commercial or Business Lawyer may be able to carefully and thoroughly examine your circumstances, goals and expectations and provide legal advice accordingly.

The first step in registering a company is selecting a business name and going through the process of registration. Registration or the use of a business name does not create a legal entity (only registering a company creates a legal entity), or allow the use of privileges to which a company is entitled, such as a corporate tax rate or limited liability. To register a business name go to the appropriate state or territory authority and follow the necessary procedures. It is not necessary to register a business name if the business is conducted under the name of the person or persons involved; that is, first name and surname, or initials and surname. A qualified Commercial lawyer might be able to advise of the procedure involved.

The next step is to register your business, whether it is a proprietary or public company, a partnership or sole practice. Before you apply to register a company you must decide how the company will be internally governed. You'll need to decide if its internal governance operates under replaceable rules, its own constitution, or a combination of both. If your company is a sole director/member proprietary company, special rules apply. You must also decide on the share structure of your company, if it is a proprietary company. The basic rules for internally managing a company are included in the Corporations Act as “replaceable rules”. Before applying to register a company you must get written consent from people who agree to fill the following roles being: director, secretary (both of which must be a person over the age of 18 years), and member (every company must have at least one member). A proprietary company must have at least one director, but does not need to have a secretary. The director and secretary (if any), must ordinarily reside in Australia. For companies limited by guarantee, members are liable as contributories on a winding-up of the company. Each member must agree in writing to the amount of “guarantee” they will pay.

A company may use the replaceable rules for its internal governance. This means the company does not need to have its own written constitution with the expense of keeping the constitutions up to date with the law, even in the event that the replaceable rules are amended. A company may choose to adopt a constitution rather than use the replaceable rules. Proprietary companies do not have to lodge their constitution when applying to register the company. However the constitution must be kept with the company's records so it is available if required. A proprietary company with a single member (shareholder) who is also the sole director has no need for a formal set of rules governing its internal relationships. Such companies do not have to adopt a constitution (although they may do so if they wish). If an additional director is appointed or an additional person becomes a member, the replaceable rules will automatically apply to the company, unless they are replaced by a constitution adopted by the company. Professional legal advice from an experienced Commercial Lawyer may be fundamentally important and create enormous value in this regard.

The next step is deciding upon the share structure. A proprietary company must be limited by shares or be an unlimited company that has a share capital, and have no more than 50 non-employee members (or shareholders). A proprietary company must not engage in any activity that would require disclosure to investors in the Corporations Act, except for an offer of its shares to existing members of the company, or employees of the company or a subsidiary of the company. An optimal structure will provide tax minimisation, ease of compliance and management as well as protection of assets and liability.

If you are a director or secretary of a small company, you must follow the obligations set out in the Corporations Act. It is important to make sure that company officeholders know what their legal obligations are, for example ensuring company details are kept up to date, maintaining various registers and records, paying the appropriate lodgement and annual review fees to avoid late fees and non-compliance action. The officeholders remain ultimately responsible for the company’s compliance with the Corporations Act. It is important that a Commercial Lawyer is able to thoroughly consider and understand yours commercial situation and arrangements to properly advise you as it may be important to protect your rights and interests.

If you need further legal advice on your ASIC Compliance matter, you may book an appointment with us by telephone (02) 9233 4048 or by email to info@navado.com.au. 

 

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