A foreign company wanting to commence operations in Australia must apply for registration with the Australian Securities & Investments Commission (ASIC) and be issued with an Australian Registered Business Number (ARBN). This type of registration is often referred to as establishing a branch in Australia.
Having recently assisted a foreign company to apply for an ARBN and an Australian Business Number (ABN), it served as a reminder at just how onerous and lengthy the registration process can be.
This article outlines the numerous steps and challenges foreign companies face when commencing operations here in Australia.
As a corporate services provider and a company that provides local agent services, we often need to navigate the difficult task of explaining the regulatory requirements of various government agencies to foreign companies, and also manage their expectations of a smooth and swift process. We find ourselves apologising for bureaucratic processes and delays which we have absolutely no control over.
We sound a little crazy when we explain the number of steps, number of documents and number of different government agencies that are involved in the initial registration process.
Step 1 - Director IDs
Firstly, we explain to our clients that all directors of the foreign company will need to apply for a Director Identification number (Director ID). This is in the form of certified original hard copy ID documents mailed to the Australian Business Registry Services (ABRS) together with the prescribed application forms, signed by each director.
Step 2 - ARBN Application
Then, the foreign company will need to provide various certified copies of original company related documents and original signed forms for lodgement with ASIC. Let’s not forget that the certifications must be dated no more than three months before received by ASIC.
What about if the foreign company is from a non-English speaking country? We then have the additional task of coordinating translation of these company documents. The language barrier and different time zones can further complicate and draw out the registration process. Additionally, terminology and legal documents in Australia may not be equivalent or fully understood by the foreign company. With ASIC having a strong focus on adhering to the stringent registration requirements, it’s no surprise that a high proportion of foreign company registration applications are delayed or rejected. The documents lodged may not be accurate or simply do not meet the stringent legal requirements. This is particularly relevant to the certified (and translated) supporting documents that must accompany the ASIC registration forms.
It doesn’t help that ASIC’s service standard for issuing an ARBN is 28 days following receipt of a successful application. The key word here is ‘successful’ because the ambiguity of some of the requirements, coupled with differences between countries and company related documents, often results in a requisition for further information or request for documents to be corrected. It doesn’t help that all communication with ASIC regarding ARBN applications are typically in hard copy letters and original lodgements. Our experience is that it can take between 2 to 4 months to complete a successful ARBN registration.
Given the above, a foreign company wanting to establish a business in Australia can avoid the ARBN application process by choosing to incorporate an Australian company as a subsidiary of the foreign parent company, such as a proprietary limited (Pty Ltd) company. This creates a separate legal entity in Australia issued with an Australian Company Number (ACN). There are numerous advantages and disadvantages of each registration approach, but we’ll save this as a topic for another blog.
Step 3 - ABN and other tax registrations
Note, we haven’t yet mentioned the process to obtain an ABN, Tax File Number (TFN) or Goods & Services Tax (GST) registration with the Australian Business Register (ABR) and Australian Taxation Office (ATO). These are usually applied for at the same time in one step.
Have we confused you yet with all the acronyms and the number of different government agencies?
It is significant to note, that an ABN application cannot proceed until ASIC has issued an ARBN and the foreign company in question has a legal presence in Australia. Non-resident directors of the foreign company will be required to lodge 'proof of identity' documents by mail, to support the ABN application lodged. These certified identification documents are in addition to those that were provided to the ABRS when applying for director ID numbers. Duplicate processes for two different government agencies that are both part of the ATO. As a result of the 'proof of identity' requirement, the ATO can typically take up to 28 days or more to grant an ABN to a foreign company.
Can you see why, despite our best efforts, we are often apologising for these cumbersome processes, delays and trying to manage client expectations?
The significance of the delays and consequences for foreign trade in Australia is lost in bureaucratic processes no longer fit for purpose and the red tape of multiple government agencies, often not meeting their own services standards. The ramifications can be significant for a foreign business that is ready to commence business dealings in Australia, but not able to sign a contract, engage staff, order material or secure an insurance policy without an ABN.
CorpSec Services works closely with foreign companies seeking to commence business operations in Australia to help them navigate their registrations with ASIC and the ATO as seamlessly as possible. We offer local agent services to foreign companies applying for an ARBN and provide assistance and guidance to ensure ongoing compliance with the Corporations Act 2001 (Cth) and with ASIC.
Contact us at team@corpsecservices.com.au for further information.
