Branch Office Australia: Systematized Information

If you’re the head of a overseas company planning to set up business within Australia, there are certain issues that must be in the lead of your mind. Perhaps probably the most significant of these is that the Corporations Act 2001 (Cth) forbids international companies from doing exactly that. Naturally, there are conditions - as the spreading of international companies participating in business in Australia attests to. In this example, there are two primary exceptions. The first is to incorporate a subsidiary in Australia. Relying on the supposed dimensions of your operations, this might be the solution to use, but it can be expensive. The choice is signing up a branch or representative office with the Australian Securities and Investment Commission (ASIC).

But, even before deciding between these entity forms, there are two questions that need to be clarified. 1. Am I a ‘foreign corporation’? Any body, whether incorporated or not, which is created in a territory or place beyond Australia is deemed to be a overseas corporation. This is granted a very huge test that should trigger little dilemma. 2. Am I ‘carrying out business’? The Corporations Act only forbids the act of ‘carrying out business.’ Unlike the initial test, this is slightly more ambiguous and thus confusing. As a rough rule of thumb, if your company’s functions in Australia are being carried out with ‘sufficient system, repetition or continuity’ they will probably be performing business. It must be taken into account that there is no prerequisite that the company be making, or even searching for, a return from the activities.

On the other hand, an individual contract that was large enough might satisfy the regulatory government bodies you were carrying out business. Ultimately, there are a selection of reasons - none of which are determinative, but are effective - to be checked out. Such as: If the activities are common and recurring in nature; Are the activities similar to those of other businesses in the same industry; Have the activities been planned, organised, and done in a business-like manner; Are the plans more permanent than short-term; Are the actions commercial, and cannot be described as a hobby?

The Act, however, acknowledges that corporations may be engaged in Australia without performing a business. If you’re worried as to which classification your corporation falls into, the following actions are deemed not to constitute ‘carrying out business’: is a party to court proceedings, a claim or a dispute in Australia; conducts internal affairs activities in Australia including directors’ meetings;

Keeps a banking account; creates proof of a debt or a charge on property, or secures that debt; subject to some conditions, conducts a remote contract (if completed within 31 days); effects a sale with an independent contractor; or spends funds or holds any property.



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