Registering a Subsidiary Company in Australia: A Strategic Move for Global Expansion

For many international companies, expanding into new markets is a key step in growth and long-term success. One effective way to establish a presence in a foreign market like Australia is by setting up a subsidiary company. If you’re considering registering a subsidiary company in Australia, it’s important to understand the process, the requirements involved, and the benefits it can bring to your business. 

What is a Subsidiary Company?

A subsidiary company is a business entity that is controlled by another company, known as the parent company. In the case of foreign businesses expanding into Australia, the parent company is typically an overseas entity that holds a majority of shares (usually 51% or more) in the Australian subsidiary. While the subsidiary operates as a separate legal entity, the parent company exerts control over its management and major decisions.

Benefits of Setting Up a Subsidiary in Australia

• Access to the Australian Market: Australia is a major player in the Asia-Pacific region with a highly developed economy, strong consumer demand, and a stable political environment. A subsidiary provides your business with a local presence and access to Australian consumers and businesses.
• Limited Liability: One of the primary benefits of setting up a subsidiary is the limited liability protection it offers. Since the subsidiary is a separate legal entity, any financial or legal issues faced by the subsidiary generally do not affect the parent company’s assets.
• Flexibility in Operations: A subsidiary allows you to tailor your business model to the local market. You can customize products, services, and marketing strategies based on Australian consumer preferences and regional trends. 
• Attracting Local Investment: A subsidiary company in Australia can attract local investors, partners, or customers, especially if the parent company is well-established or has a strong brand reputation. Having a local entity can also enhance credibility and trust with Australian clients and business partners.
• Tax Benefits: Australia has competitive corporate tax rates and various tax incentives for businesses, such as deductions for research and development (R&D) activities.
   

When registering, you will need to submit the following details:

• Company name: Ensure that the company name is unique and available. You can check name availability through ASIC’s online search tools.
• Business address: Provide a physical address in Australia where the company’s records will be kept.
• Directors and shareholders: List the names and addresses of the company’s directors and shareholders. At least one director must be an Australian resident.
• Company constitution: Prepare the constitution, which is a set of rules governing the subsidiary’s operations.
  
  

Key Steps in Registering a Subsidiary Company in Australia

1. Choosing the Business Structure

Before proceeding with registration, the parent company needs to decide on the business structure for the Australian subsidiary. Typically, a subsidiary is set up as a private limited company (Pty Ltd) in Australia. A Pty Ltd company is the most common legal structure for foreign businesses in Australia and offers limited liability for shareholders.

2. Registering with the Australian Securities and Investments Commission (ASIC)

To legally operate in Australia, your subsidiary company must be registered with the Australian Securities and Investments Commission (ASIC). ASIC is the government body responsible for regulating corporate activities in the country.

• Company name: Ensure that the company name is unique and available. You can check name availability through ASIC’s online search tools.
• Business address: Provide a physical address in Australia where the company’s records will be kept.
• Directors and shareholders: List the names and addresses of the company’s directors and shareholders. At least one director must be an Australian resident.
• Company constitution: Prepare the constitution, which is a set of rules governing the subsidiary’s operations.

Once your subsidiary is successfully registered, you will receive an Australian Company Number (ACN), which is a unique identifier for your business in Australia.

3. Obtain an Australian Business Number (ABN) and Tax File Number (TFN)

After registering with ASIC, you will need to apply for an Australian Business Number (ABN) and a Tax File Number (TFN). The ABN is a unique 11-digit identifier required for businesses to interact with the Australian government and the Australian Taxation Office (ATO). It is also necessary for registering for Goods and Services Tax (GST) if your business’s annual turnover exceeds the GST threshold.

4. Appoint Local Directors and Company Secretary

Australian law requires that a subsidiary company have at least one director who is an Australian resident. The director is responsible for overseeing the company’s operations and ensuring compliance with Australian corporate laws.

5. Set Up a Business Bank Account

To operate in Australia, your subsidiary will need a local business bank account. This account will be used for all financial transactions, including paying suppliers, employees, and receiving payments from customers.

6. Comply with Ongoing Reporting and Tax Requirements

Once your subsidiary is set up, you must comply with ongoing reporting and tax obligations. This includes:

• Submitting annual financial statements to ASIC
• Filing tax returns with the ATO
• Registering for and remitting GST (if applicable)
• Keeping proper records for auditing purposes
  
  

Final Thoughts

Registering a subsidiary company in Australia offers a wide range of benefits, including market access, limited liability, and the ability to adapt your business to the local market. By following the steps outlined in this guide, foreign businesses can navigate the process of registering a subsidiary and begin operations in one of the world’s most dynamic economies.