We check your new Australian Pty Ltd company registration. This is before we incorporate it with ASIC.
Your new company and constitution are structured to perform many jobs. These include:
At no additional charge, we talk to ASIC on your behalf. This is to make sure your company is registered correctly. Our law firm provides a complete company register. It contains all minutes and our constitution. The documents are stored online for you to access at any time.
As you build your Australian company on our website, check if your preferred company name is available.
Restricted words and expressions in an Australian company:
You cannot use words that could mislead people about a company’s activities. This includes links to the Government, the Royal Family, or ex-service groups.
ASIC also refuses offensive and illegal names.
Australian Business Number: ABN
Company: Co, Coy
Proprietary Limited: Pty Ltd
Australian companies are governed by either:
* a constitution (recommended), or
* replaceable rules
Replaceable rules (from the Corporations Act 2001) provide a basic set of rules for your company. They are not good. Few accountants, lawyers and advisers recommend them.
Replaceable rules are less than the bare minimum. There are many additional powers that a company should have. These are only found in a constitution.
Replaceable rules change at the whim of the current government. While the changes may benefit ‘society’, they may not be in the best interests of shareholders. In contrast, shareholders can amend constitutions anytime.
* Adj Professor, Dr Brett Davies’ Doctorate was on business succession planning, our pre-emptive rights are cutting edge
* ‘tag along’ requirement forcing minority shareholders to also sell their shares together with majority shareholders
* accountant friendly, GAAP compliant valuation powers
* profit distributions, even when there is no ‘profit’ for ATO purposes
* over 30 different classes of shares – see the sample. And you can add to the classes of shares at any time
* allowing Directors and shareholders to use Zoom and other online facilities
* built-in Division 7A Loan Deeds
Pty Ltd companies are the vast majority of companies registered in Australia. Over 99% of companies incorporated in Australia are Pty Ltd. (Less common is “Ltd” and “No Liability”.)
The 7 advantages of using Legal Consolidated:
A company pays tax at a fixed rate. (In contrast, a human being pays tax at different marginal tax rates. The more you earn the higher the tax rate.) Your company (flat) tax rate depends on whether the company is a base rate entity.
From 2021 there is a 5% difference.
For example, in 2018/19, a company’s base rate entity and use the Low Rate if its aggregated turnover is less than $50m and 80% or less of its assessable income is base rate passive income. Passive income includes such things as dividends and rent.
The maximum rate that a company can use to frank dividends is its corporate tax rate for imputation purposes. It is worked out based on the company’s position in the prior year. It is either the current year Low Rate or the High Rate based on the prior year’s levels of aggregated turnover, base rate passive income and assessable income.
If the company was set up in the current year then the maximum franking rate is the Low Rate for the current year.
Q: When purchasing a new company on your website, does the constitution by default include a clause allowing for digital signatures for Directors? I know you do not like digital signatures!
A: You are correct, I do not like digital signatures. But the Company Constitution is fully updated to allow for all legislation of digital signatures and over Internet meetings, such as:
Yes. It is called a Corporate Power of Attorney. Legal Consolidated Constitutions allow for Company POAs.
When you build a company, any company, it becomes a beneficiary under a Family Trust prepared by Legal Consolidated or Brett Davies Lawyers. This is the case for most Australian Family Trusts, as well.
You could build the company many years after you built the Family Trust deed. It does not matter. The compnay automatically becomes a beneficiary under your family trust. You are then able to use it as a ‘bucket’ company if you so wish.
Similarly, if get married and have children then they automatically become beneficiaries under the Family Trust.
This is because the Family Trust has ‘classes’ of ‘beneficiaries’. And these classes are ‘open’.
The definition of beneficiaries generally includes ‘my spouse, children, grandchildren, great grandchildren and any company I have an interest in, from time to time‘.
So generally any company you have an interest in is also a beneficiary under your Family Trust.
Interestingly, if you have a share in say, Rio Tinto, and if Rio Tinto has 300,000 beneficiaries, then all 300,000 beneficiaries are also beneficiaries of your family trust!
So pretty much any company you have an interest in is a beneficiary of your family trust. Obviously, a “Special Purpose Company” (while also a beneficiary of your family trust) can not be used as a bucket company. This is because a Special Purpose Company can only do one job. This is to be a trustee of your Self-Managed Superannuation Fund.
Your Family Trust distributes to humans beneficiaries (mum, dad, children) first. This is to use up their low marginal tax rates. When there is no one left on low marginally tax rates then the family trust pours the rest of the income into the ‘bucket’ company. The company gets whatever income is left to be distributed.
Unlike humans, companies pay a fixed percentage rate of tax. Whether the company gets $10,000 or $100,000 in trust income it pays the same percentage tax rate.
However, bucket companies are rarely used, these days. This is because of the draconian and cruel Division 7A.
Over 99% of Pty Ltd companies only have one director. This is for asset protection. But you can have more. There are distinctions in the types of directors. These are all ‘nicknames’ for different roles a director may hold. You can mix and match these powers as the shareholders see fit:
The above expressions are descriptive. They are not strict legal terms. Because you have a Legal Consolidated Constitution you can change and amend the powers of the directors.
A Pty Ltd company in Australia requires a company register. All Australian companies keep some form of written financial records that:
Section 9 Corporations Act defines ‘books’ to include:
All Australian Pty Ltd companies maintain ‘books’. The common expression is the ‘company secretary file’. The Corporations Act sets out how this is maintained. It also states who is provided access to the information in the company secretary file.
You suffer penalties if you fail to maintain the company’s books, destroy or falsify them. For example, false minutes carry a fine and two years in jail.
These financial records can be electronic. But they must be convertible into hard copy. You must be able to print them.
Even if the financial records are held by your accountant, you, as a company officeholder, are still responsible for providing copies to auditors or anyone entitled to inspect your records.
Section 1306 Corporations Act 2001 permits companies to prepare and store their ‘books’. This includes registers and minutes, in a ‘mechanical, electronic and other device’.
But, the data stored in the device must be able to be reproduced ‘at any time’ in a written form. You must be able to print it out.
Also, Pty Ltd companies take reasonable precautions to protect its records against damage and tampering.
A company is also obliged to keep written financial records that correctly record and explain the company’s activities, financial position and performance. See section 286 Corporations Act 2001.
These records are kept for seven years. Section 288 allows financial records to be kept electronically. But, again, this is so long as they can be converted into a hard copy on demand.
Electronic signatures are recognised in Australian law under the Electronic Transactions Act 1999 (Cth). States adopt similar rules.
But these provisions do not apply to the Corporations Act 2001. Therefore, minutes are signed in hard copy before electronic storage.
And in any event, Legal Consolidated, is not an advocate of electronic signatures.
Q: I want to appoint a Governing Director. This is so they cannot be removed. They are on the Board until they die, become of unsound mind or resign.
The powers of the Governing Director are:
A: Also, a Governing director has:
After your company is incorporated think about a Shareholders Agreement. This is if you have more than just you and your spouse control the Pty Ltd company. Shareholders agreements are in addition to the constitution. It between the members. It governs share ownership and transfers, dividend policies and management roles. They override the constitution.
Build a Shareholders Agreement. And in the Minutes have the shareholders unanimously agree to the powers of the Governing director.
Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
National: 1800 141 612
Mobile: 0477 796 959
Email: [email protected]