Setting up a Subsidiary Company in Australia
Australia has become one of the most favored nations for international investors. The nation ranks in the 14th position as per the ease of doing business index. As Australia continues to be a magnet for international business and investments, understanding the role and dynamics of subsidiary companies becomes crucial. Whether you’re a budding entrepreneur, a multinational firm, or someone curious about the Australian corporate scene, diving into the world of subsidiary companies in Australia offers enlightening insights.
Through this guide, we will be discussing how you can set up a subsidiary company in Australia along with their requirements. Further, we would explain how a subsidiary differs from a branch in Australia.
What is a Subsidiary Company?
In simple terms, a subsidiary company is a business controlled by another, referred to as the parent or holding corporation. The control typically arises from the parent company owning more than half of the subsidiary’s voting shares.
Why Choose Australia for Your Subsidiary?
- Stable Economic Environment: Australia boasts a resilient economy with a track record of steady growth. This offers a sense of security for businesses hoping to expand here.
- Transparent Business Practices: Australia’s business regulations are transparent, making it easier for foreign entities to understand and comply with local laws and regulations.
- Strong Consumer Market: The Australian market is characterized by its educated consumers who are open to new products and services. This presents a vast array of opportunities for businesses in diverse sectors.
- Geographical Advantage: Strategically positioned in the Asia-Pacific region, Australia serves as a gateway to the burgeoning markets of Asia.
Requirements to establish a subsidiary company in Australia
Here are the requirements for establishing a subsidiary company in Australia:
- Business name: It is crucial to pick a business name for your subsidiary firm.
- Australian Business Number: The Australian Business Number is a distinctive 11-digit number used to identify your company or organization.
- Australian Company Number: The Australian Company Number is a distinctive 9-digit number that distinguishes your business and that needs to be written on all official business documentation.
Procedure for Registering a Subsidiary Company in Australia
For those considering establishing a subsidiary company in Australia, the process is relatively straightforward:
Choose a Name
This should be unique and not already in use or reserved by another company in Australia.
Choose a Business Structure
The most common structure for a subsidiary company in Australia is a proprietary limited company. This offers limited liability and is ideal for small to medium enterprises.
Register with ASIC
All businesses have to enroll with the Australian Securities & Investments Commission (ASIC). This involves obtaining an Australian Company Number (ACN) and ensuring the company name is available.
Open a Bank Account
Just like any other business, your subsidiary will need an Australian bank account. This facilitates transactions and helps in managing finances locally.
Appoint Local Directors
At least one director should ordinarily reside in Australia.
Understand Your Tax Obligations
Engage with the Australian Taxation Office (ATO) to know your taxation duties.
How is a branch different from a subsidiary in Australia?
Legal Entity
A branch is not a distinct legal organization from its parent company, while a subsidiary is. This means that the parent company is directly liable for the actions of the branch, whereas, in a subsidiary, the liability is limited to its investment in the subsidiary.
Control and Operations
Branches function as an extension of the parent company, implying that their operations and policies are generally controlled from the headquarters. In contrast, subsidiaries can have their own management and operational policies, distinct from the parent.
Setup and Reporting
Setting up a branch can be less cumbersome than setting up a subsidiary. However, branches often require more extensive financial reporting, encompassing global financials, as opposed to subsidiaries that report only their own finances.
Conclusion
Australia’s robust economy, stable governance, and transparent regulations make it a fertile ground for subsidiary companies to flourish. Whether it’s about tapping into the vast potential of the Australian market or leveraging operational benefits, subsidiary companies offer a myriad of advantages. As the global business environment evolves, the role of subsidiary companies in Australia will only become more pronounced, acting as a testament to the nation’s unwavering commitment to fostering a conducive business ecosystem.
If you are looking to set up a subsidiary company in Australia, you can speak with experts from OnDemand International. Our team of experts is knowledgeable about the nuances of Australian regulations and requirements. From initial consultation to securing all necessary documentation, we provide thorough assistance to guarantee your business venture in Australia is set up for success.
FAQ’s
A subsidiary company in Australia is a business entity that’s majority-owned (typically over 50% of the shares) by a different business, referred to as the parent or holding firm.
A subsidiary is a distinct legal organization, distinct from its parent company. A branch, on the other hand, is not a distinct legal organization but it is an extension of the foreign corporation operating in Australia.
Companies might set up subsidiaries in Australia for various reasons, including tapping into the local market, benefitting from potential tax advantages, ensuring limited liability, or maintaining operational independence in the Australian region.
Yes, according to Australian corporate law, at least one director of the subsidiary company should ordinarily reside in Australia.
To establish a subsidiary in Australia, you’ll need to choose a unique company name, register the company through the Australian Securities & Investments Commission (ASIC), appoint local directors, and fulfill any other regulatory requirements.
