How To Set Up A Holding Company In Australia

Are you looking to set up a holding company in Australia? A holding company carries numerous benefits, including asset protection, diversification opportunities, and access to more capital.

In this article, we’ll highlight the advantages and the requirements of establishing a holding company in Australia. We’ll also offer the steps to follow when setting up the holding company, from choosing the company name to registering and structuring it.

Remember, a holding company is a legal entity that must abide by the laws of the land. When setting up the company, ensure you engage with an experienced commercial lawyer to understand the legal requirements of a holding company in Australia.

What Is A Holding Company?

As the name suggests, a holding company holds a controlling interest over other companies, referred to as a subsidiary. A holding company doesn’t manufacture goods or provide services but owns major shares or assets in its subsidiaries.

The holding company can be a limited liability company (LLC) commonly known as a ‘Proprietary Limited Company’ or ‘Pty Ltd’ or a corporation. It’s not actively involved in the daily operations of its subsidiaries but rather controls the policies and oversees major management decisions.

A holding company is a separate business/legal entity from its subsidiaries. Each company (the parent and subsidiary) has its own liabilities, assets, and legal obligations. For instance, creditors can’t come after the holding company if one of its subsidiaries goes bankrupt.

What Are The Benefits Of A Holding Company?

Holding companies offer investors and their subsidiary companies numerous benefits. These advantages include:

  • Asset protection: If a holding company owns the assets of its subsidiary companies, they are protected from any debts or liabilities that the subsidiaries might incur.
  • Risk protection: The holding company can reduce/distribute risk by ensuring that each major asset is separately owned by different subsidiaries. This strategy reduces the risks of losing all assets if one subsidiary becomes insolvent.
  • Minimise tax obligations: Holding companies can be strategically structured to reduce the tax burden of the parent and subsidiary companies.
  • Centralised control: One holding company can select a board of directors to manage all its subsidiaries. The centralised management can reduce costs while offering more efficiency.
  • Offers flexibility: Holding companies can hold shares in different companies and own independent assets like real estate and intellectual property.

Requirements Of Setting Up A Holding Company

The requirements for setting up a holding company in Australia are similar to those for establishing any other company. The minimum requirements include:

  • At least one shareholder (from any nationality)
  • At least one director must be a resident of Australia
  • Local registered address
  • At least one company secretary
  • At least one public officer (Australian resident)

How To Set Up A Holding Company In Australia: Step By Step Guide

  • Choose the company name

The first step is to decide the name of your company. Use the Australian Securities and Investments Commission (ASIC) Registry Search to confirm whether your desired name is available for registration.

  • Decide the state/territory of company registration

After choosing the company name, decide the state or territory where you’ll register the company. When submitting your registration application, you must nominate the state or territory of registration.

  • Select the company address

Your holding company must have a registered office address  (within Australia) where the people/government can send notices and communications. Additionally, the company must have a principal place of business address where it conducts its operations.

  • Register your holding company

Apply for company registration through the ASIC website and pay the registration fees. You must also obtain an Australian Company Number (ACN), a unique nine-digit number used for identification.

Additionally, registered businesses in Australia must have an Australian Business Number (ABN) from the Australian Taxation Office. This unique 11-digit number is used for identification, filing taxes, and accessing government services.

You must also register for Goods and Services Tax (GST) if your holding company has a turnover exceeding $75,000 in a financial year.

  • Open a corporate bank account

After completing all the necessary registrations, you’ll need to open a corporate bank account bearing your holding company’s name.

  • Structure your business

The final step involves structuring your holding company. The activities include selecting the company officeholders like directors and secretaries. You should also decide on the share structure, including the shareholders.

Reporting Requirements Of A Holding Company In Australia

The Australian Securities & Investments Commission (ASIC) requires a holding company to report changes, corporate matters, and actions. For instance, you must report your company and disclose its name for records after registration.

Additionally, a holding company must submit returns and business statements of its subsidiary companies to ASIC. Reporting is also necessary when changing the company name or ceasing your operations.

When running a holding company, it’s essential to seek legal advice from an experienced business lawyer to understand all your legal obligations, including reporting requirements.

Need Help Setting Up A Holding Company In Australia?

Are you planning to set up a holding company in Australia? Our guide offers the steps to follow when registering a holding company. However, you will need expert legal advice to analyse your specific circumstances and needs to guide you through the process.

Consult with Aditum Lawyers to help set up your holding company. We’ll offer advice and legal representation, ensuring your company complies with all the legal requirements of a holding company in Australia. Fill in the form on the right or call us on 1300 234 886 for a free consultation with one of our commercial lawyers.

Resources & Further Reading

  1. https://www.investopedia.com/terms/h/holdingcompany.asp
  2. https://asic.gov.au/for-business/registering-a-company/before-you-register-a-company/checklist-for-registering-a-company/
  3. https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst
  4. 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

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal advice. Consult with a qualified commercial lawyer for personalised advice regarding your specific situation.