How to set up a new Australian limited company

Checklist: before you start

To set up a new Australian company, the basics you will need are:

1. A company name which ends in "Proprietary Limited" (or just "Pty Ltd" for short) or "Limited" (or "Ltd" for short), depending whether it is a private or public company. The name cannot be identical to an existing company name or registered business name, although it can be very similar. ASIC usually only rejects exact matches. Certain words are restricted, such as "bank", "university" or "trust". The full list of names that cannot be used is
here. If you don't choose a name (or don't want to choose a name) the company's name will be its Australian Company Number (or ACN). For example, the company's name could be just ACN 123 456  789 Pty Ltd.

2. One shareholder minimum (for either a private or a public company). A proprietary (private) company has a maximum of 50 shareholders (not counting employee shareholders). If you want more than this number of shareholders, you need to set up a public company. There is no minimum share capital required to incorporate a new company, although there has to be at least one share on issue at the time of formation. There is no Australian franchise tax or similar impost on share capital.

3. One director minimum for a private company, or 3 minimum for a public company. Directors have to be individuals (not companies), and aged 18 years old or above. At least 1 director has to be an Australian resident. You will need a written consent from the director, which you should keep with the company's records (it does not need to be filed with ASIC).

4. A public company needs a company secretary, but this is optional for a private company. The secretary can be the same person as the director. In a one director company, it is common for the same person to be both the sole director and sole secretary. You will need a written consent from the secretary, just like a director.

5. All companies need a registered office in Australia. This can be the office of the company's accountant or lawyer, or even your home address. For a proprietary (private) company, the office does not need to be open to the public. However, it is a place where legal documents can be legally served on the company, so it cannot be a Post Office Box. If the company does not own or lease the office, you will need the occupant's written consent for use as the registered office.

6. Decide if you need a Constitution (this is the internal rules for the company, which in other countries may be called By-laws or Articles of Association). Public companies require a Constitution, and have to file it with ASIC with the incorporation documents. A Constitution is optional for a private (proprietary limited) company. If you don't have a Constitution then the "replaceable rules" will apply. These are a set of basic rules in the Corporations Act which deal with matters such as appointment and powers of directors, issue and transfer of shares, meeting procedure, and dividends. Click here for the ASIC guide and complete list of replaceable rules. For a company with external investors or directors, or multiple shareholders, a written Constitution is usually advisable.

To incorporate the company

Once you have done the checklist items, the next step is the formal incorporation process. This can be done in two ways:

1. Do it yourself with ASIC

The cheapest way is to download an ASIC Form 201, fill it out yourself, and file the paper form and filing fee with ASIC (either by mail or over the counter at an ASIC business centre in a capital city). The ASIC filing fee for a new company incorporation is $426. Once ASIC processes the form, it will issue a new Australian Company Number (ACN) and a Certificate of Incorporation. Fee changes: from 1 July 2011 the ASIC fee to register a proprietary limited company increased to $426.

2. Use an online incorporation agent

If you want a new company quickly, you should use one of the ASIC-approved online incorporation agents (their ads can be found on this page). They are very fast (the new company will be formed in just a few minutes), and they also make the paperwork easy by providing you with the consent forms, company Constitution, share certificates, board minutes, and other documents. Their fees tend to be quite competitive, and can be under $500 which includes the ASIC filing fee.

Most people use an online incorporation service for new company formation.

Post incorporation compliance steps

Setting up a new company is not the end of your corporate compliance obligations. There are tax, accounting and ongoing ASIC filings to be made. See our quick guide to compliance obligations for tips on what to look out for.

 

What is a Shelf Company?

When people wanted a new company quickly they used to buy a "shelf company", meaning an already incorporated company that could be bought "off the shelf" from a professional shelf company provider. They would then have to change the company name to  a name of their choice, which involves ASIC filing fees. These days, new companies can be set up online in just a few minutes, so there is no need to take the risk and cost of buying an existing company.