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Company Registration


What is a 'Public Officer'?

Under Australian taxation law, every company carrying on business or deriving property income in Australia must have a public officer (unless the company is specifically exempted).

The company must appoint a public officer within 3 months of the company:

  1. Commencing to carry on business; or
  2. First earning income in Australia.

The public officer must be at least 18 and must live in Australia.

The public officer is responsible for ensuring that the company pays the correct amount of tax.

If a company is in default, then the public officer is liable to pay any penalties. However, the public officer is not personally liable for payment of tax due by the company.

What do I do if I want to add more directors in the future?

The initial director or directors can appoint more directors in the future - as follows:

  1. The new director must be at least 18 years old;
  2. The new director must consent to their appointment before they are appointed;
  3. The current directors must appoint the new director by recording the appointment and signing the record; and
  4. The company must then notify ASIC of the appointment by lodging an ASIC Form 484 within 28 days after the appointment. You can download the form from the ASIC website and lodge it with ASIC - see www.asic.gov.au

Can a trust be a shareholder?

No (but see next 2 questions). A trust cannot own shares in a company because the law says a trust is not a separate legal person. For example, the 'John Smith Family Trust' cannot own shares or any other property.

Even so, the trustee of a trust, in his, her or its capacity as trustee, is capable of owning shares and other property - see next question.

Can a trustee be a shareholder?

Yes, a trustee can own shares in a company - as long as you include the trustee's name and their capacity. For example:

'John Smith in his capacity as the trustee of the John Smith Family Trust'.

In this case, the trustee holds the shares in the company on trust for the beneficiaries of the trustee's own trust.

(The trust itself cannot own shares as it is not a legal entity.).

Can a corporate trustee be a shareholder?

Yes a corporate trustee can own shares in a company - as long as you include the trustee's name and their capacity. For example:

'ABC Pty Ltd in its capacity as the trustee of the ABC Family Trust'.

In this case, the trustee holds the shares in the company on trust for the beneficiaries of the trustee's own trust.

(The trust itself cannot own units as it is not a legal entity.)

If I want to issue more shares in the future, how many should I create now?

The number of shares the company should issue depends on your individual circumstances. However, if you intend to incorporate a simple company, with you and maybe 1 or 2 others as directors, then generally a company will issue a nominal amount of shares, say 100 shares at $1.00 each.

The company can issue more shares to others as time progresses.

What does the 'directors' interests' refer to?

Under the Corporations Act 2001, a director of a company who has an interest (perhaps a conflict of interest) in a matter that concerns the Company may give the other directors notice of the nature and extent of the interest.

The notice must state the nature and extent of the interest and be given at a director's meeting or to the other directors individually in writing.

Is the certificate of registration issued by Cleardocs sufficient to give a bank?

Yes, the Certificate of Registration that Cleardocs receives electronically from ASIC and provides to you electronically is the original certificate. The only way ASIC provides its standard Certificates is electronically. The standard certificate is enough to open a bank account and is what most companies use. (Apart from the standard certificate, you can order a hardcopy printed “commemorative certificate” direct from ASIC. These commemorative certificates cost extra.)

Bank rejection? Occasionally when a Cleardocs customer is trying to set up a bank account, the bank rejects the certificate that the customer received from Cleardocs electronically and then printed and provided to the bank. A bank that does this — or at least, the relevant branch that does this — is several years out of date with ASIC’s systems etc.

If a bank rejects your certificate and asks “for the original certificate”, then the thing to do is to get the person at the bank to check the above information with ASIC. They can do that by:

  • calling ASIC on 1300 300 630;
  • when listening to the options, they should press 1, then 1 again; and
  • when they speak to the person at ASIC, they should explain that you registered the company through Cleardocs and the Certificate was provided in electronic form.

ASIC will explain things to the bank.

You might like to call ASIC on the number etc. above to confirm all this for yourself

Does Cleardocs automatically register the company for an ABN and a TFN?

No, Cleardocs does not arrange the ABN and TFN. You can do that yourself at www.ato.gov.au or www.abr.gov.au/ABR_BC/.

When should the company apply for an ABN?

ABNs are not compulsory. However, there are many good reasons to have one, for example, ABNs help:

  1. You to deal with the ATO; and
  2. You in dealing with other businesses when supplying goods or services to them, or when purchasing goods and services.

Also, you need an ABN to register for GST. Entities carrying on an enterprise in Australia with a GST turnover of $75,000 must register for GST.

More information can be found at www.abr.gov.au.

Will the company be entitled to an ABN?

Companies incorporated through Cleardocs are incorporated under the Corporations Act 2001 in Australia - these companies are entitled to an ABN.

What is an ultimate holding company?

A company is an ultimate holding company of a wholly-owned group if it has a subsidiary and the company is not a subsidiary of another company. This means, the ultimate holding company owns or controls more than 50% of the shares in the subsidiary and can be referred to as the "controlling entity".

The key element is control. One company controls a second company if it has the capacity to determine the outcome of the decisions of the second company's financial and operating policies.

The ultimate holding company may have a number of subsidiaries.

Can I issue preference shares under the Cleardocs Constitution? What should I bear in mind?

Yes, it is possible to issue preference shares under the Cleardocs Constitution — but you need to be careful and to seek professional advice.

The Cleardocs Constitution provides for a range of share classes which confer different rights and restrictions in different combinations. Those share classes include a form of redeemable preference share.

If you are considering registering a company with any form of restricted or preference shares, then you, the company, and the company's directors and shareholders, need to carefully consider the implications. For instance, the shares may be treated as debt provided to the company rather than capital, as is explained below.

The rights and restrictions attaching to shares will be important to, and are likely to be reviewed by, stakeholders such as:

  • Government regulators — who assess the company's debt and equity ratios, net asset position, cash needs and surplus liquid funds requirements and so on.
  • Banks and other financiers — who assess the company's financial position, and the implications of restricted or preference shares: on their security position; on the company's capacity to meet financial covenants; and on its capacity to meet repayment obligations.
  • Investors — who assess the impact of restricted or preferential shares (either already on issue on which will be issued to them) on:
    • their assessment of the risk associated with the investment;
    • dividend flow;
    • capital return; and
    • voting power.

What is a 'special purpose' company?

A special purpose company is a company which, like its name suggests, is set-up for a particular purpose. A special purpose company might be set-up solely to be the trustee of an SMSF. Or it might be set-up to pursue certain charitable purposes.

This product is a not-for-profit special purpose company. The requirements for a not-for-profit special purpose proprietary limited company are set out in section 3(d) of the Corporations (Review Fees) Regulations 2003 (regulations made under the Corporations Act 2001). These regulations provide that the constitution of a special purpose company:

  • requires the company to pursue charitable purposes only and to apply its income in promoting those purposes;
  • prohibits the company making distributions to its members and paying fees to its directors; and
  • requires its directors to approve all other payments the company makes to them.

ASIC has confirmed that the key requirement for creating a not-for-profit proprietary limited company is that the constitution of that company states that it has been created for a specific purpose: pursuing charitable purposes.

On a winding-up of a not-for-profit proprietary limited company, any assets which are left over after the company has paid its debts must be distributed to another entity with similar objectives to the not-for-profit company. The assets must not be distributed to the shareholders.

The company is a proprietary company, limited by shares: what makes it not-for-profit?

Ordinarily, companies which are established with share capital are 'for-profit'. The share structure allows the company to distribute profits and dividends to shareholders in proportion to their shareholding. When the company is wound-up the liability of the shareholders is limited to the amount they've paid for their shares.

The Cleardocs not-for-profit proprietary limited company is not-for-profit because its constitution:

  • requires the company to pursue charitable purposes only and to apply its income in promoting those purposes;
  • prohibits the company making distributions to its members and paying fees to its directors;
  • requires its directors to approve all other payments the company makes to them; and
  • must provide for winding-up distributions to be made to like-minded companies.

What is a PAF?

PAFs, or public ancillary funds, are funds endorsed by the Australian Taxation Office as PAFs.

Tax legislation specifies that a PAF is an ancillary fund established and maintained under a will or instrument of trust for, among other things, the purpose of providing money, property or benefits to endorsed deductible gift recipients (DGR)s.

The key features of a PAF are:

  • the governing rules of the PAF must set out and reflect that it is established as a not-for-profit entity;
  • the public must contribute to the fund;
  • the fund must be established and must operate in Australia;
  • on winding-up, the assets of the PAF must be provided to a DGR.

The PAF must also have an investment strategy and must distribute at least 4 per cent of the market value of the fund's net assets annually.

You should ensure that you have ongoing legal advice about the operations of your PAF. There are a number of reasons for this, including:

  • guidelines about PAFs may change: the Commonwealth Treasurer has the power to make (and change) legislative guidelines about the establishment and maintenance of PAFs; and
  • penalties may apply if your PAF is non-complying: the Commissioner of Taxation has the power to impose administrative penalties on trustees that fail to comply with the guidelines and to remove or suspend trustees of non-complying PAFs.

You can use the Cleardocs not-for-profit company to be the trustee of a PAF, but you don't have to. If you do want the company to be the trustee of a PAF, then you need to choose 'yes' to the following questions on the Cleardocs interface:

  • 'Is this company going to be a not-for-profit company?'
  • Is the company ONLY to be the trustee of a Public Ancillary Fund?

What happens to the assets of the not-for-profit Company on a winding-up?

On a winding-up of the not-for-profit proprietary limited company, any assets which are left over after the company has paid its debts must be distributed to another entity with similar objectives to the company. The assets must not be distributed to the shareholders.

Can the capital and profits of my company be directed to the members?

No. The income of the company must be applied solely towards the company's charitable purpose.

Can the directors of my company be paid any fees or remuneration for their services?

Directors of a not-for-profit proprietary limited company cannot be paid fees for their services.

The directors can, however, be remunerated for travelling and other expenses they incur in relation to their duties as directors. The directors must approve any such payment before it is made.

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The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.