Aspects Of Branch And Representative Offices In Australia

If you're the chief of a overseas company wanting to set up business within Australia, there are several points that must be in the forefront of your mind. Perhaps probably the most essential of these is that the Corporations Act 2001 (Cth) forbids international companies from doing only that. Obviously, there are exceptions - as the growth of international companies engaging in business in Australia attests to. In this situation, there are two main conditions. The initial is to have a subsidiary in Australia. Relying on the expected dimensions of your functions, this might be the way to go, but it can be costly. The choice is signing up a branch or representative office with the Australian Securities and Investment Commission (ASIC).

But, even before selecting between these entity forms, there are two questions that need to be clarified. 1. Am I a 'foreign corporation'? Any body, whether incorporated or not, which is put together in a territory or place outside of Australia is presumed to be a international corporation. This is admittedly a very vast test that should bring about little misunderstandings. 2. Am I 'carrying out business'? The Corporations Act only discourages the act of 'carrying out business.' Unlike the first test, this is slightly more unclear and thus confusing. As a rough principle, if your company's functions in Australia are being performed with 'sufficient system, repetition or continuity' they will probably be carrying out business. It really should be noted that there is no requirement that the company be creating, or even looking for, revenue from the actions.

On the other hand, an individual transaction that was sufficient enough might satisfy the regulatory government bodies you were doing business. Eventually, there are a variety of factors - none of which are determinative, but are suggestive - to be investigated. Some examples are: If the activities are typical and repetitive in nature; Are the activities similar to those of other businesses in the same industry; Have the actions been planned, organised, and accomplished in a business-like manner; Are the plans more permanent than temporary; Are the functions commercial, and unable to be described as a hobby?

The Act, however, recognises that corporations may be engaged in Australia without performing a business. If you're anxious as to which kind your corporation falls into, the following functions are regarded not to constitute 'carrying out business': is a party to court proceedings, a claim or a dispute in Australia; conducts internal affairs functions in Australia such as directors' meetings;

Keeps a bank account; creates proof of a debt or a charge on property, or safeguards that debt; subject to some conditions, conducts a remote contract (if completed within 31 days); effects a sale with an independent contractor; or invests funds or holds any property.