Australia: Eight key points to keep in mind when setting up a new entity in Australia

Last Updated: 19 May 2017
Article by Carl Hinze and Linda Lau
Most Read Contributor in Australia, December 2018

The process of setting up an Australian subsidiary or a new entity in Australia can be stressful and confusing for many foreign investors. To help with this process, we have listed below eight key points to consider when establishing a new entity in Australia.

  1. Company registration
  2. Foreign companies may conduct business in Australia through an Australian branch (by registering the foreign company through the Australian Securities Investment Commission (ASIC)) or subsidiary (by registering a new company through ASIC). The procedure to register an Australian branch of a foreign company is slightly more onerous than setting up a new subsidiary company in Australia, and in practice most foreign companies elect to establish a new company in Australia as a subsidiary. This article focuses at a high level on the key considerations facing Australian subsidiaries of foreign companies.

    The procedure for setting up a limited liability company, either a proprietary or non-listed public company, is straight forward, with the relevant forms required to be lodged with the ASIC.

    Australian companies must have a registered office to receive ASIC correspondence and to liaise with ASIC. Also, there needs to be (at least) one director and a secretary who ordinarily resides in Australia (a secretary is mandatory for a public company and usual, but not compulsory, for a proprietary company).

  1. Directors' compliance and corporate governance
  2. The Corporations Act 2001 (Cth) (Corporations Act) imposes duties and obligations on company officers (commonly company directors and secretaries) in relation to honesty, reasonable care and diligence and proper use of information and position.

    The Corporations Act requires a director to actively participate in the company's affairs and take positive steps to ensure he or she is adequately informed about the financial affairs of the company. In respect of the latter, directors must ensure that the company does not trade when insolvent (i.e., when the company is not able to pay its debt as they become due).

    Serious consequences may flow to officers for breach of these duties, including legal proceedings being taken against a director to recover compensation for losses resulting from insolvent trading, bans from holding a company office for a specified period or indefinitely, fines and, in extreme cases, imprisonment. As such, foreign investors need to ensure that officers are aware of their legal obligations, and that a compliance program and appropriate training are available to its Australian entitys' officers so they are able to uphold their legal duties.

  1. Accounting and financial management
  2. A company (and its officers) is required to keep accounting records that correctly record and explain the transactions and the financial position of the company. Such accounting records are to enable the preparation of 'true and fair' financial statements and (where required) an audit of such requirements.

    For reporting entities (which includes all public companies), 'large proprietary companies' and 'foreign controlled small proprietary companies', the financial statements are to be prepared in accordance with the provisions of the Corporations Act, Australian Accounting Standards and the 'interpretations' issued by the Australian Accounting Standards Board from time to time. A directors' compliance program should be implemented to ensure that this matter is adequately addressed.

  1. Preparation of employment agreement templates
  2. In Australia, both federal and state laws govern nearly all aspects of the employment relationship, including the standard terms and conditions of employment, leave and holidays, tax and superannuation, discrimination and workplace health and safety. It is also important to consider the application of Modern Awards - which are industry and occupation based – on the employment relationship in Australia.

    For foreign companies who have a subsidiary which is registered in, or employs people in Australia, it is worth considering to prepare a template employment agreement for general employees as well as senior managers. Contracted conditions are subject to the minimum employment standards provided under the National Employment Standards, awards and enterprise agreements. Subject to each individual's circumstances, the template employment agreement can then be varied to address the additional terms and conditions including (but not limited to) bonuses, salary sacrificing arrangements and post-employment restraints.

  1. Sponsoring overseas workers for temporary and permanent residency visas
  2. It is common for a foreign controlled subsidiary in Australia to sponsor its foreign workers for temporary and permanent residency visas in Australia, especially for personnel at the executive, managerial, professional, and technical and trade levels.

    From March 2018, the Temporary Work (Skilled) visa (subclass 457) will be abolished and replaced with the new Temporary Skills Shortage visa. The visa will be comprised of a Short-Term stream of up to two years, which can be renewed only once. There is also no permanent residence pathway from this visa. It will be important for foreign companies with subsidiaries in Australia to understand the implications of immigration laws in Australia on their Australian business plans.

  1. Leasing a commercial property
  2. When a foreign company initially establishes a presence in Australia, it may be preferable to enter into a lease of a commercial property as an alternative to buying land. A lease confers a right of exclusive possession of the land for a fixed period of time. Depending on the character of the premises being leased (retail or non-retail), it may be governed by different legislation. It is advisable for foreign companies to engage professional legal assistance in reviewing and advising on the lease in question at an early stage.

  1. Protecting intellectual property
  2. The principal forms of intellectual property protection available in Australia are copyright, patents, design and trademarks, all of which are governed by legislation. The common law also provides remedies against a person passing off goods or services as those of another, as well as protection for confidential information and trade secrets. We recommend foreign investors appropriately register their intellectual property (if applicable) as soon as they decide to carry out their businesses in Australia.

  1. Preparing standard commercial contracts or terms of trade
  2. A contract is a legally enforceable agreement or promise. In Australia, a contract will only be enforceable where it satisfies the relevant requirements including offer, acceptance, consideration, intention to create legal relations and certainty. While a contract is generally regulated by the common law, there is also legislation to remedy unfair and unconscionable contracts. As such, foreign investors (and their Australian entities) are encouraged to prepare standard commercial contracts and terms of trade appropriate for the Australian market and to receive advice on corresponding Australian law-related issues. Foreign companies should be aware that Australian law provides for statutory warranties which apply to certain goods and services. These implied warranties cannot be contracted out of, or refused, changed or limited by a retailer or supplier, and liability for breach of statutory warranties cannot be excluded and may only be limited to the extent permitted by applicable law.

This high-level note is not an exhaustive list of all of the key matters which foreign companies need to consider when establishing a presence in Australia. For instance, it does not consider important issues such as foreign investment applications under Australia's foreign investment review regime. It also does not consider anti-trust and competition regulation or anti-bribery and corruption matters. This note is intended to provide a basic introductory guide to key issues which foreign investors often overlook when deciding to establish a legal presence in Australia.

Holding Redlich's China practice is delighted to assist foreign investors to set up and do business successfully and safely in Australia. Please do not hesitate to contact us if you have any questions or need assistance in relation to any of the above matters.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Carl Hinze
Linda Lau
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions