Without hesitation, being familiar with the Australian regulatory framework is extremely important when starting a business there. ASX-listed companies especially, but generally all Australian companies are expected to follow all of the local requirements and regulations. We will now explore what these conditions are and what steps foreign investors need to take to perform a seamless registration of their new company in Australia.
Board of Directors
Usually, it is a BoD that governs a company in Australia. The specific ASX guidelines dictate how independent directors and a chairman should be selected and then appointed to their functions.
Traditionally, it takes a board committee to form a company in Australia. This committee’s tasks include monitoring regulatory compliance, remuneration, and appointments as well as assessing possible risks. It is common for company directors to delegate their powers if needed to other directors, a committee of directors, personnel, or someone else.
Responsibilities of directors
Directors’ duties include among others:
- Acting in their company’s best interest;
- Acting meticulously and honestly;
- Avoiding misusage of their position and status;
- Avoiding conflicts of interest and holding back from pursuing personal interests.
In addition, it is the directors’ responsibility to keep up with financial reporting on time. Other responsibilities can be adopted by directors in case of the company’s financial struggles. In fact, if directors do not respect their responsibilities, they can be punished by being charged with fees or even imprisonment.
With the exception of small companies in private ownership limited by their guarantees, Australia requires companies to appoint independent auditors. Only non-executive and independent directors can be a part of audit committees in incorporated companies.
All listed companies in Australia must conform to a requirement of submitting semi-annual or annual reports on a regular basis. For this case, small privately owned companies are an exception, too. However, the exception does not apply if a small company is controlled from abroad annually or every half year. The reports must comply with Australia’s accounting and registration standards; it is the directors’ responsibility to ensure that.
According to the country’s legislation, insider trading in securities, other financial products, or other investment is strictly prohibited. Australia’s strict transaction rules involving 3rd parties apply to all companies with no exception and are specially monitored when it comes to state-owned companies performing those transactions. A shareholder must always approve transactions if they are not processed under normal circumstances.
Actually, there are certain prohibited periods when senior management is not allowed to trade in securities and financial products from their companies. Such periods are the ones before an annual or semi-annual report is submitted or before the AGM. The ASE should be informed by directors about all trading information about their companies. Moreover, stock market operators also have a duty of reporting suspicious activity to the regulators.
Among other requirements, Australia has some firm bankruptcy laws that every registering company must comply with. Since directors are the ones responsible for their company to not go bankrupt, it is their duty to ensure their company’s solvency regularly. In case the solvency state is not satisfactory, they need to seek a professional consultation.
It is considered a breach if:
- Directors take out a loan knowing that their company is bankrupt;
- Their company goes bankrupt because of not being able to pay off its debt.
Are you starting a company in Australia? Do not hesitate to contact COREDO and arrange a personal consultation. We will provide you with the necessary advice and useful tips on the registration process.