What Are The Legal Restrictions I Should be Aware of When Choosing a Company Name?

If you are registering a company, you can choose a name for that company, provided the name you want is available and is not prohibited.

If you don’t choose and specify a name when you complete the forms necessary to register a company, the Australian Company Number (ACN) assigned to your new company will be recorded, by ASIC,  as its name. For example, if you register a company but do not request a particular name, the ACN assigned to your company – let’s say 123 456 789 – will form its name: ACN 123 456 789 Pty Ltd.

Some names cannot be used as a company name. For starters you can’t register a company under a name that is identical to the name of: a registered company, a registered foreign body, a registered business name, or a reserved company name.

You also cannot register a name that is prohibited by Schedule 6 of the Corporations Regulations, which restricts the use of terms such as “bank” and “Olympics” in company names.

The company name you choose must not be misleading or deceptive and it can’t be regulated by another law. For instance, there’s a law that governs the use of the word “university”

When you choose a name, you must include ‘identifiers’ that explain the type of company you are operating. If you are registering a proprietary company, you will need to include the identifier Pty Ltd in the company’s name.

Use the company name search tool on our home page to check that your preferred name is available. It may also be wise to check whether other existing companies have names that are similar to the one you want to use. For example, you may think twice about using the name AAA Australia Pty Ltd if a company called AAA Global Ltd is already up and running.

This is as much a marketing as a legal concern. You want your company name to be identified with your products or services, not those of another entity, particularly if it turns out to be a competitor. The legal issues also need to be considered carefully. You don’t want to fall foul of false or misleading conduct laws if you are attempting to associate your business with another, perhaps well established, brand.

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What Are The Advantages of Structuring My Business As a Company Instead of Operating As a Sole Trader?

Most new businesses in Australia either commence operating as a sole trader or they register a private (PTY LTD) company. If you start a business as a sole trader, you will need to apply for an ABN and you can either trade under your own name or register a business name.

The main advantage of operating as a sole trader is that you get to keep all the profits made by the business after paying tax. The main disadvantage is that the law does not distinguish between you – the private individual – and your sole trader business. In other words, if something goes wrong with the business, you are completely legally responsible for its debts/liabilities.

Registering a company, of which you become a director, means your business is a recognised legal entity in its own right. Your personal liability as an owner and director of the business can be limited so you won’t be held completely liable if the company runs into financial problems.

The taxation treatment of an incorporated business (company) also varies from how a sole trader is taxed. In the case of a company, it is the taxable entity and taxed at a comparatively lower rate than the higher personal tax rates that you might find yourself paying as a sole trader.

If you register a company, you can elect to be a paid employee, as well as a director and shareholder. As a shareholder, you have the opportunity to earn dividends and sell your shares in addition to earning a salary as a company employee.

The administrative burden is higher when you operate a company rather than running your business as a sole trader. However, in most instances, because your legal liability is reduced, a company is the safer business structure for most businesses.

One of the easiest ways to register a company is to use an online service such as the one offered by ptyltdcompany.com.au

Who are The ‘Members’ of a Company and What Role do They Play?

A company’s members are its owners. All companies must have at least one member. You don’t have to reach a minimum age before you can become the member of a company under Australia’s Corporations Act 2001, however, some companies may set a minimum age in their own constitution.

A private or proprietary company is not permitted, under Australian corporations law, to have more than 50 members that are not employees of the company. No limit is placed on the number of members for a public company, which is listed on the stock exchange.

To become a company member, you must be “an entity that can own property, sue or be sued.” In other words, certain ‘entities’ can and cannot be members of a company according to the Corporations Act 2001. For example, if you are one of the following you can become a company member:

1. An individual person (Jo Blogs)
2. A body corporate (Blogs Pty Ltd)
3. A body politic (NSW Government)

On the other hand, the following do not qualify to be a company member:

1. A business name
2. An estate
3. A trust

In order to be a member of a company, an estate or a trust need to nominate an executor or a trustee to hold shares in a company on their behalf.

A company has its own legal existence and owns its own assets, even though it is owned by its members. The company’s assets do not belong directly to its members and those members can’t usually be held personally liable for the company’s debts or liabilities. If called upon to do so, the only financial obligation of a member is to pay the company any unpaid amount owed on his or her shares.

Meetings of members can be held at which members can vote on resolutions and make decisions about how the affairs of the company are conducted. Specific rules are set out in Australian corporations law about how members’ meetings must be conducted.

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What are the Rights of a Company Member in Relation to Accessing Information from a Proprietary Company?

A company’s members have the right to access certain information about the company and they also have the power to call upon the directors of the company to produce certain information.

#Share Register

For starters, as the member of a company, you are entitled to inspect its share register without charge. This will usually be held at the company’s registered office. It contains the name and address of each member, the numbers of  shares they hold, which class of shares they hold and any amount of money paid and unpaid on those shares.

A company has seven days to provide a copy of the share register after you request a copy. If you are not a member of the company, fees apply for inspecting or gaining a copy of a company’s share register.

Australian company law does prohibit the use of share register information for what it considers to be “improper purposes”.

For example, you can’t use member details found on a share register to ask that member for a donation. Stockbrokers must not access share register information with the aim of recruiting new clients. Anyone accessing the information on a share register cannot use that information to make ‘unsolicited’ offers to purchase a member’s shares ‘off market’.

#Constitution

A copy of a company’s constitution must also be made available to a member within seven days of you making a written request. You may have to pay a fee to receive a copy. These fees are set out in Sch 4 of the Corporations Regulations.

#Report requests

Members who have at least 5% of the votes in a small company limited by guarantee or a small proprietary company can also direct the company to prepare a financial report and a directors’ report for a financial year (provided it is not more than 12 months after the end of the financial year in question). They can also ask for these reports to be sent to all members of the company.

The members giving such a direction must sign it before it needs to be carried out by the company. They can also specify whether or not the financial report needs to comply with certain accounting standards and whether or not it needs to be audited. They can also specify whether a certain part of the report or a directors’ report doesn’t need to be prepared as part of the request.

#Minutes

A member can inspect the minutes or written record of members’ meetings and resolutions at the company’s registered office (or its principal place of business) for free. A fee may be charged if the member wants a copy of minutes.

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How Do I Go About “Reserving” a Company Name If I Am Not Quite Ready to Register My New Company Yet?

ASIC allows you to reserve a company name for an initial period of two months. You can do so by completing an ASIC Form 410. Then when it comes time for you to register your company with onlinecompanyregistration.com.au, all you need to do is quote the Reservation Number that has been given to you by ASIC.

The fee for reserving a company name is $44 and you can lodge your reservation at an ASIC business center, by post or online.

If you want to extend the initial two-month reservation, you may do so, but you will need to lodge the extension prior to the expiry of the initial reservation period. You’ll need to lodge another Form 410 for a subsequent period of two-months, and pay another $44 lodgement fee. After your first extension, ASIC requires a letter outlining why you need to reserve the company name for longer than a four-month period.

You will need to following information to complete a Form 410 for the initial two-month company name reservation:

1. The company name you wish to reserve
2. The type and class of company it will be used for
3. Your name and address
4. The purpose for which you wish to reserve the company name

If you want an extension, you will need to include the initial Reservation Number when you fill out the subsequent Form 410 and you will need to provide a reason for the extension. For example, you may be waiting for the initial meeting of directors to approve the company name.

How Much Does it Cost to Register and Operate a Company in Australia?

The cost of registering a new company with ASIC, under Section 118 of the Corporations Law 2001 – if the company has a share capital – is $444. This fee needs to be paid at the time the application is made to register the new company.

We add our fee for acting as your agent to assist with the registration. Our’s is one of the lowest fees in the country at only $34 including GST. We are able to keep our fees low because our service is fully automated and online.

The ASIC costs are the same for transferring the registration of a company or registering a foreign company in Australia.

A few other costs can be associated with registering a new company. For example, ASIC will charge $44 to reserve a company name and another $44 if you wish to extend the period of that reservation.

If you need to apply for special permission from the Minister to use a company name, the cost involved is currently $1107. If you wish to apply to use a company name without the word ‘limited’, a $366 fee applies.

Once a company is up and running, ASIC charges other fees such as an annual fee of $236 for proprietary companies (other than special purpose companies which are charged $44). For most companies, the annual review date is the date 12 months from the company’s registration or incorporation.

A company can nominate to pay its annual review fees 10-years in advance. For a proprietary company (other than a special purpose company), the cost for 10-years is $1771. If you don’t elect to pay in advance, the company will need to pay its annual review fee within two months of the review date. If the payment is received within one month after that due date, a late lodgement fee of $72 applies.

The fee gets even more hefty if you are more than a month late with lodgement. You’ll incure a $299 late fee in addition to any fees already payable.

The good news is that ASIC does not charge any fees for a raft of other services that a company may need to use, such as notifying ASIC of supplementary information for the company register, the issue or cancellation of shares, notifying of members’ resolutions in relation to shares or changing the address of the company’s registered office.

How do I Go About Appointing ‘Officers’ to a Newly-Registered Australian Company?

A company’s ‘officers’ are its directors and secretary. The process for appointing and removing officers is set out in the company’s constitution or via the Replaceable Rules within the Corporations Act. Here’s an overview of what’s involved.

Directors and secretaries can be appointed by a directors’ or members’ resolution, in accordance with the company’s constitution or the Replaceable Rules. According to Sec 201G of the Corporations Act, which is the Replaceable Rule in relation to the appointment of directors, “A company may appoint a person as director by resolution passed in a general meeting”.

Directors may also appoint other directors or alternate directors, for example, to make up a quorum for a directors’ meeting.

When initially appointing directors and/or a secretary to a proprietary company, the person to be appointed to either of those positions must give their consent in writing to the appointment. The company must keep the consent and notify ASIC of the appointment.

The same person may act as both a director and a secretary of a company.

When ASIC is notified of the appointment of an officer, whether a director or secretary, the following information needs to be forwarded to the regulator: the person’s full name, date of birth, residential address, place of birth and date of appointment to the role of director and/or secretary.

It is important that anyone consenting to take on the role of director or secretary, fully understands their responsibilities in relation to that role.

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What is The Roles and Responsibilities of The Company Director and The Company Secretary?

Company directors and company secretaries are known as the ‘officers’ of a company. Office bearers, such as directors and a secretary, can be appointed by the company’s members and directors at the time of registering the new company with ASIC. Such appointments must be made in accordance with the Replaceable Rules set out in the Corporations Act 2001 or, if the company has one, in line with the terms and conditions of its own constitution.

Anyone wishing to accept an appointment as a director or secretary must give their written consent, which needs to be kept on file by the company. The company also needs to inform ASIC that particular offices have been appointed to their roles.

It is acceptable for one individual to act in both the role of a company director and a company secretary.

The main role that must be filled by the company director is to actually manage the company’s business and affairs. You need to be 18 years of age before you can become a company director.

The Corporations Act 2001, sets out the core duties that should be performed by a company director. For example, the law says a director must act with care and diligence, act in good faith and not to use their role improperly.

The main responsibility of the company secretary (or secretaries), on the other hand, is to perform administrative duties for the company and on behalf of directors. It is the company secretary’s role, for example, to take minutes at directors’ or members’ meetings. The company secretary must also keep the company register up to date and lodge all necessary forms with ASIC.

A director or directors can carry out the duties normally performed by a secretary if a company decides not to appoint a secretary.

Both directors and secretaries have a duty to ensure the company doesn’t ‘trade while insolvent’. They are responsible, as officers of the company, to ensure it is able to pay its debts as and when they become payable.

Directors and secretaries may continue to have responsibilities to the company and its members or shareholders, even after the company has been wound up.

A failure to fulfil the duties set out in the Corporations Act 2001 and regulations, may result in directors or company officers being forced to pay fines, fulfil compensation orders, be disqualified from their positions or even go to goal.

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What is The Difference Between Registering a Business Name and Registering a Company?

Business name registration is a different process to registering a company. When you register a new company with ASIC, you are basically ‘creating’ or bringing a new corporation into existence, in accordance with the Corporations Act 2001. On the other hand, registering a business name simply allows a business to operate under that name.

Individuals, associations and companies can register a business name if they wish to carry out an enterprise under that specific name. If the business name is not the exact name of the person or corporate entity conducting the business, then that name must be registered with ASIC.

The business name chosen cannot be identical to the name of a registered company, a reserved company name or a business name that has already been registered. It is also worth remembering that all businesses trading in Australia must also have an Australian Business Number (ABN).

Company registration was previously known as ‘incorporation’. The process of registering a company results in that entity having the same powers and legal capabilities as an individual.

Before ASIC will register a company in accordance with the Corporations Act, the applicant will need to determine the type of company to be registered. Will it be a proprietary (private) or public company. You will also need to decide on:

1. A proposed name for the company
2. Who will be its shareholders, directors and secretary?
3. Where will its principal place of business and registered office be located?

Onlinecompany.com.au, thanks to our direct connectivity with ASIC and our advanced technology, can then make the process of registering your company simple. To streamline the process even further, we suggest you have the following information on hand:

1. The proposed company name, unless you are happy for the company to trade under its CAN, eg 123 456 789 Pty Ltd
2. The company’s proposed address (principal place of business)
3. The address of its registered office
4. The identity of any ultimate holding company
5. Name, address, place of birth, date of birth and any former name of each director and secretary (note, a private company does not need a secretary)
6. Name and address of proposed shareholders (include ACN,ABN if shareholder is a company)
7. Details of shares to be issued to proposed shareholders. You will need to include the type and number of securities to be issued and whether they are fully-paid. Companies limited by guarantee will also need to provide the proposed amount of the guarantee each member has agreed to in writing.

A private (proprietary) company must have at least one director and one shareholder. The sole director may also be the sole shareholder and secretary but a proprietary company doesn’t need to have a secretary. If it does have a secretary, at least one will need to reside in Australia.

A public company must have at least three directors. At least two directors and one secretary of a public company (a company that is able to issue shares to the public) must usually reside in Australia.

Each proposed director and secretary must give their written consent to taking up their positions and these consents must be kept on file by the company.

Upon registration by ASIC, the new company will be issued with a unique Australian Company Number (ACN).

The advantage of using an agent such as onlinecompany.com.au to assist with the company registration process is that we are able to provide you with ready-to-go replaceable rules (constitution), register, pro-forma that can be used for written consent of directors/secretaries, minutes of first meeting of directors, share certificates, etc. None of those documents is provided by ASIC as part of the registration process.

What is a Corporate Key and When is One Required?

A Corporate Key is like your company’s Personal Identification Number (PIN). It is a unique eight-digit number that comes with your company’s ACN and is issued at the time you register a company.

Within two days of registering a new company with the Australian Securities and Investments Commission, ASIC will send a letter to the company’s registered office containing the corporate key. It will then appear on the top right hand corner of the company’s annual statement.

A corporate key makes it possible to register online with ASIC so you can log forms and receive annual statements digitally. Once you’ve registered you won’t need to quote the corporate key each time you login.

If, instead of lodging forms online, you wish to lodge paper forms, you will need to include the corporate key as indicated. If the correct corporate key is not included in lodged documents, you will be contacted by ASIC before any lodgement is processed.

The corporate key is fixed for the life of the company but there are circumstances under which you can request to have the existing key cancelled and apply for a new corporate key. You must be an office holder or agent of the company or be an administrator or liquidator in order to request the provision of a replacement corporate key.

The main reasons for requesting a new corporate key would be if the security of your company’s number had been breach. For instance, unauthorised personnel may have gained access to it. Another reason for seeking its replacement would be if the original had been forgotten or misplaced.

if you register online and intend to do all of your business with ASIC digitally, it is essential to ensure that you keep your corporate key. There may be occasions when corporate forms will need to be lodged in paper form, particularly forms 362, 484 or 486 and you will need your corporate key to do so.

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