Chapter 1. Overview & Legal Foundation
1-1. Governing Body
The Australian Securities and Investments Commission (ASIC) is the sole national regulator that registers companies in Australia. It administers the Corporations Act 2001 (Cth) and maintains the public companies register. Tax-side registrations (ABN, TFN, GST) are administered by the Australian Taxation Office (ATO) through the Australian Business Register (ABR).
- ASIC business hub: https://asic.gov.au/for-business/
- Australian Business Register: https://www.abr.gov.au/
- ATO business hub: https://www.ato.gov.au/businesses-and-organisations/
1-2. Core Legal Framework
| Instrument | Citation | Scope |
|---|---|---|
| Corporations Act 2001 (Cth) | Act No. 50 of 2001 | Company registration, governance, officeholder duties, share rules |
| Corporations Regulations 2001 | F2023C00897 | Procedural rules, prescribed forms, fees indexation |
| A New Tax System (Australian Business Number) Act 1999 (Cth) | Act No. 84 of 1999 | ABN issuance via the ABR |
| Income Tax Assessment Act 1936 (Cth) / 1997 (Cth) | — | TFN and tax obligations |
| Business Names Registration Act 2011 (Cth) | — | Business name registration (separate from company name) |
Primary legislation source: https://www.legislation.gov.au/C2004A00818/latest/text (Corporations Act 2001 — current compilation).
1-3. Three Common Legal Structures (Comparison)
Under the Corporations Act 2001 (Cth), s.112, the principal company types are: proprietary (limited or unlimited) and public (limited by shares, limited by guarantee, unlimited with share capital, no liability). Sole traders are not companies — they are individuals trading under their own name or a registered business name.
| Feature | Sole Trader | Pty Ltd (Proprietary Limited) | Public Company (Ltd) |
|---|---|---|---|
| Legal structure | Individual (no separate legal entity) | Separate legal entity (Corporations Act 2001 (Cth), s.124) | Separate legal entity (Corporations Act 2001 (Cth), s.124) |
| Liability | Unlimited personal liability | Limited to unpaid amount on shares (Corporations Act 2001 (Cth), s.516) | Limited to unpaid amount on shares (s.516) |
| Number of members | 1 (individual) | 1–50 non-employee shareholders (Corporations Act 2001 (Cth), s.113(1)) | No upper limit |
| Minimum directors | N/A | 1 director ordinarily resident in Australia (Corporations Act 2001 (Cth), s.201A(1)) | 3 directors, at least 2 ordinarily resident in Australia (Corporations Act 2001 (Cth), s.201A(2)) |
| Minimum company secretary | N/A | None required (Corporations Act 2001 (Cth), s.204A(1)) | At least 1 secretary ordinarily resident in Australia (Corporations Act 2001 (Cth), s.204A(2)) |
| Public share offers | N/A | Prohibited from public fundraising (Corporations Act 2001 (Cth), s.113(3)) | Permitted (subject to Chapter 6D disclosure rules) |
| ASIC registration required | No (only ABN if trading) | Yes — Form 201 | Yes — Form 201 |
| Annual review fee | None | Yes (paid annually to ASIC) | Yes |
| Financial reporting | None to ASIC | "Small proprietary" generally exempt (Corporations Act 2001 (Cth), s.45A(2)) | Mandatory annual financial report (Corporations Act 2001 (Cth), s.292) |
| Member detail disclosure | N/A | Must notify ASIC of any member change (Corporations Act 2001 (Cth), s.178A) | No requirement to notify ASIC of member changes |
| Suffix | Business name only | "Pty Ltd" / "Proprietary Limited" required (Corporations Act 2001 (Cth), s.148(2)) | "Limited" / "Ltd" required (Corporations Act 2001 (Cth), s.148(2)) |
Sources:
- ASIC company types: https://www.asic.gov.au/for-business-and-companies/companies/company-building-blocks/company-types/
- ASIC officeholder rules: https://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company/minimum-officeholders/
- Sole trader vs company comparison: https://business.gov.au/planning/business-structures-and-types/business-structures/difference-between-a-sole-trader-and-a-company
1-4. Pty Ltd Sub-Categories (Corporations Act 2001 (Cth), s.45A)
A proprietary company is classified each financial year as small or large:
| Classification | Test (must satisfy 2 of 3) | Reporting |
|---|---|---|
| Small proprietary (s.45A(2)) | Consolidated revenue < A$50m / Consolidated gross assets < A$25m / Fewer than 100 employees | Generally exempt from preparing annual financial reports |
| Large proprietary (s.45A(3)) | Fails 2 or more of the above | Must prepare and lodge annual financial reports (s.292) |
Source: https://www.legislation.gov.au/C2004A00818/latest/text
1-5. ABN, ACN, TFN — Three Identifiers
| Identifier | Format | Issued By | Required For |
|---|---|---|---|
| ACN (Australian Company Number) | 9 digits | ASIC, on registration of a company under Corporations Act 2001 (Cth) | All companies — must appear on public documents (Corporations Act 2001 (Cth), s.153) |
| ABN (Australian Business Number) | 11 digits (includes ACN as digits 3–11 for companies) | ATO via the Australian Business Register, under A New Tax System (ABN) Act 1999 (Cth) | Issuing tax invoices, GST registration, claiming GST credits |
| TFN (Tax File Number) | 9 digits | ATO, under the Income Tax Assessment Act 1936 (Cth) | Lodging the company income tax return |
Order of registration for a Pty Ltd:
- Reserve / choose company name (optional — Form 410)
- Register the company with ASIC → ACN issued (Form 201)
- Apply for ABN via the ABR → ABN issued
- Apply for TFN (typically combined with the ABN application) → TFN issued
- Register for GST if turnover ≥ A$75,000 (or A$150,000 for non-profits) (A New Tax System (Goods and Services Tax) Act 1999 (Cth), s.23-15)
Sources:
- ABN application requirements: https://www.abr.gov.au/business-super-funds-charities/applying-abn/what-you-need-your-abn-application
- ASIC ACN page: https://www.asic.gov.au/for-business-and-companies/companies/register-a-company/australian-company-number-acn/
- ATO business registration: https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/registration-obligations-for-businesses/work-out-which-registrations-you-need/business-or-company-registrations
- TFN application (business): https://www.abr.gov.au/business-super-funds-charities/applying-other-registrations/apply-tfn-business
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Quick Decision Matrix
Choose the right business structure in 5 seconds.
| Your Goal | Recommended Structure | Key Consideration | Go To |
|---|---|---|---|
| Solo founder, low risk | Sole proprietorship or single-member LLC | Simplest setup, limited liability | Chapter 3 |
| Partnership with co-founders | LLC or Limited Partnership | Operating agreement essential | Chapter 3 |
| Seeking venture capital | Corporation (C-Corp equivalent) | Investor-friendly structure | Chapter 3 |
| Small local business | LLC or local equivalent | Balance of simplicity and protection | Chapter 3 |
| Asset protection priority | LLC with strong veil | Jurisdictional differences matter | Chapter 4 |
5-second answer: Most small businesses should start with an LLC (or local equivalent). Read Chapter 2 for requirements, Chapter 3 for step-by-step setup.