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  • Form of entity

    Branch

    It is possible for foreign companies to conduct business in Australia through a branch office. A foreign company can establish a branch in Australia by registering with ASIC as a foreign company carrying on business in Australia. It must also appoint a local agent who will be responsible for ensuring the foreign company's compliance with the Corporations Act.

    Proprietary company

    A proprietary company is a company designed for a relatively small group of shareholders. It is the most common type of company for smaller businesses and has the advantage of being simpler to manage and less expensive to administer. Managed by a board of directors which is responsible for making business decisions and overseeing the general affairs of the company. Directors are usually appointed and removed by the shareholders.

    Public company

    Similar in concept to a proprietary company but there is no limit on the number of shareholders. There is also no limit on the ability of a public company to raise funds from the public (subject to disclosure requirements).

  • Entity set up

    Branch

    • To establish a branch, the foreign company must be registered with the Australian Securities and Investments Commission (ASIC) and assigned an Australian Registered Body Number (ARBN)
    • A branch is not a separate legal entity. The foreign company has full legal responsibility for the actions of the Australian branch
    • Must appoint at least one local agent
    • The local agent is responsible for the foreign company's compliance with the Corporations Act 2001 (Cth) (Corporations Act) and is personally liable for any breaches or penalties
    • Must maintain a registered office in Australia
    • Taxed as a separate entity in Australia; taxed on all income sourced from Australia, and
    • The Foreign Investment Review Board approval may be required before assets/land is acquired

    Proprietary company

    • Must have at least one shareholder but no more than 50, not including employee shareholders
    • Generally, no personal liability of the shareholders beyond amount agreed to be subscribed for shares
    • Taxed on its earnings at the corporate level; can frank dividends distributed to shareholders
    • Usually has a constitution setting out operational procedures
    • Board of directors has overall management responsibility
    • Shareholders purchase shares in the company; may have numerous classes of shares; and
    • Cannot engage in fundraising activities that would require disclosure to investors under the Corporations Act (eg, requiring a prospectus to be issued)

    Public company

    • Must have at least one shareholder, but can have any number
    • Generally, no personal liability of the shareholders beyond amount agreed to be subscribed for shares
    • Taxed on its earnings at the corporate level. Can frank dividends distributed to shareholders
    • Usually has a constitution setting out operational procedures
    • Board of directors has overall management responsibility
    • Shareholders purchase shares in the company. May have numerous classes of shares, and
    • Can offer shares to the public, but must comply with requirements of the Corporations Act, including issuing a disclosure document such as a prospectus
    Note: Within the above categories, variations occur such as unlimited liability companies, companies limited by guarantee and no liability companies. These are very rarely used for business purposes and are not considered further.
  • Minimum capital requirement

    Branch

    No minimum capital requirement.

    Proprietary company

    No minimum capital requirement.

    Public company

    No specified minimum capital requirement.

  • Legal liability

    Branch

    A foreign company has full legal responsibility for the actions of the Australian branch, and can sue and be sued in Australia. A local agent may also be personally liable for penalties imposed on the foreign company for contraventions of the Corporations Act.

    Proprietary company

    A company's shareholders' liability is generally limited to the extent of their initial investment, and the amount, if any, unpaid on their shares.

    Public company

    A company's shareholders' liability is generally limited to the extent of their initial investment, and the amount, if any, unpaid on their shares.

  • Tax presence

    Branch

    A foreign company is taxed as a separate entity in Australia and taxed on all income sourced from Australia. As the foreign company is carrying on an enterprise in Australia, it will also be required to register for GST.

    Proprietary company

    The company is taxed at a fixed rate on its income (and capital gains). Profits are usually distributed by way of dividend. Dividends may be "franked" in effect to give recipient shareholders a credit for the tax paid by the company.

    Public company

    The company is taxed at a fixed rate on its income (and capital gains). Profits are usually distributed by way of dividend. Dividends may be "franked" in effect to give recipient shareholders a credit for the tax paid by the company.

  • Incorporation process

    Branch

    A foreign company's registration with ASIC has the effect of establishing a branch office. The foreign company wishing to apply for registration should reserve the company's name to ensure that it is available in Australia and must lodge with ASIC an application form, together with a certified (and translated if not in English) copy of the company's certificate of registration and constituent documents. Once the application is lodged, processing may take up to 28 days.

    Proprietary company

    File an Application for Registration as an Australian Company with Australian Securities and Investments Commission (ASIC) and the prescribed fee is paid. Upon incorporation, ASIC will issue to the company a certificate of incorporation and an Australian company number (ACN). Taxation registrations are separate from the incorporation process.

    Public company

    The company must file an Application for Registration as an Australian Company with ASIC and pay the prescribed fee. Upon incorporation, ASIC will issue to the company a certificate of incorporation and an ACN. Taxation registrations are separate from the incorporation process.

  • Business recognition

    Branch

    Less common (and thus less well known to third parties) than a subsidiary.

    Proprietary company

    Well regarded and widely used.

    Public company

    Well regarded and widely used. All Australian companies listed on the Australian Stock Exchange are public companies.

  • Shareholder meeting requirements

    Branch

    Not applicable.

    Proprietary company

    Not required to hold an annual general meeting but actions requiring shareholder approval require a shareholders' meeting or a written resolution.

    Public company

    Must hold an annual general meeting within 18 months of incorporation and within five months of the end of its financial year.

    Other meetings may be held as required.

  • Board of director meeting requirements

    Branch

    Not applicable.

    Proprietary company

    As required (no prescribed minimum). Usually at least one meeting is held each year (eg, to approve accounts or confirm solvency).

    Public company

    As required (no prescribed minimum). Usually at least one meeting is held each year (eg, to approve accounts or confirm solvency).

  • Annual company tax returns

    Branch

    Must lodge a (federal only) company tax return each year, even if the business doesn't expect to pay any income tax.

    Proprietary company

    Must lodge a (federal only) company tax return each year, even if the business doesn’t expect to pay any income tax.

    Public company

    Must lodge a (federal only) company tax return each year, even if the business doesn't expect to pay any income tax.

  • Business registration filing requirements

    Branch

    A balance sheet, profit and loss account, and cash flow statement must be lodged with ASIC each year.

    Proprietary company

    A company must confirm its corporate details and also pay a review fee to ASIC each year.

    Public company

    A company must confirm its corporate details and also pay a review fee to ASIC each year.

  • Business expansion

    Branch

    No need to change as business expands.

    Proprietary company

    No need to change as business expands (but accounts filing requirements depend on size and ownership).

    Public company

    No need to change as business expands.

  • Exit strategy

    Branch

    Cessation – within seven days after ceasing to carry on business in Australia, a registered foreign company must lodge written notice that it has so ceased.

    Dissolution of foreign company – if ASIC receives notice from a local agent of a registered foreign company that the foreign company has been dissolved or deregistered in its place of incorporation, ASIC must remove the foreign company's name from the register.

    Proprietary company

    Deregistration – if there are no liabilities and minimal assets (currently AU$1,000). Application to deregister is lodged with ASIC.

    Liquidation – if there are insolvent or significant assets or liabilities to be dealt with. A formal process involving the appointment of a liquidator, providing proof of debts, realizing assets, paying creditors and distributing any surplus.

    Public company

    Deregistration – if there are no liabilities and minimal assets (currently AU$1,000). Application to deregister is lodged with ASIC.

    Liquidation – if there are insolvent or significant assets or liabilities to be dealt with. A formal process involving the appointment of a liquidator, providing proof of debts, realizing assets, paying creditors and distributing any surplus.

  • Annual corporate maintenance requirements

    Branch

    Once the foreign company is registered, it is required to lodge with ASIC, at least once every calendar year and at intervals of not more than 15 months:

    • A copy of its balance sheet, profit and loss statement, and cash flow statement
    • Any other documents it is required by law to lodge in its country of origin, and
    • Pay ASIC the prescribed lodgment fee

    Changes to directors need to be notified as they occur.

    Proprietary company

    A company must confirm its corporate details and pay a review fee to ASIC each year. Depending on size and ownership, financial statements may need to be filed each year. The accounting requirements imposed on a proprietary company under the Corporations Act depend on whether the company is classified as small or large and whether it is foreign owned. Unless granted relief from ASIC, large proprietary companies are required to prepare an annual financial report which must be audited. A company is classified as small for a financial year if it satisfies at least two of the following tests:

    • Annual revenue of less than AU$25 million
    • Consolidated gross assets of less than AU$12.5 million at the end of the year, and
    • Fewer than 50 employees at the end of the year

    Public company

    A company must confirm its corporate details and pay a review fee to ASIC each year.  An annual financial report must be prepared and audited.

  • Director / officer requirements

    Branch

    Not required to have a local director but a registered foreign company must have one local agent.

    Proprietary company

    Must have one director who must ordinarily reside in Australia.

    Public company

    Must have at least three directors, at least two of whom must ordinarily reside in Australia.

  • Local corporate secretary requirement

    Branch

    Not required to have a secretary.

    Proprietary company

    Not required to have a company secretary, but if a company has one or more, at least one of them must ordinarily reside in Australia.

    Public company

    Must have at least one company secretary, one of whom must ordinarily reside in Australia.

  • Local legal or admin representative requirement

    Branch

    None beyond the required local agent.

    Proprietary company

    None beyond the required director and secretary (optional).

    Public company

    None beyond the required directors and secretary.

  • Local office lease requirement

    Branch

    Must have a registered office in Australia. This does not have to be owned or leased.

    Proprietary company

    Must have a registered office in Australia. This does not have to be owned or leased. Corporate records are generally required to be maintained at the registered office.

    Public company

    Must have a registered office in Australia.

  • Other physical presence requirements

    Branch

    Nil.

    Proprietary company

    Nil.

    Public company

    Nil.

  • Sufficiency of virtual office

    Branch

    Sufficient for registration.

    Proprietary company

    Sufficient for registration.

    Public company

    No, see Local office lease requirement.

  • Provision of local registered address by law firm or third-party service provider

    Branch

    Allowed.

    Proprietary company

    Allowed.

    Public company

    Allowed, but the registered office of a public company must be open to the public each business day from at least 10:00 am to 12:00 noon and from at least 2:00 pm to 4:00 pm, or at least three hours – chosen by the company between 9:00 am and 5:00 pm each business day.

  • Provision of local director or corporate secretary by law firm or third-party service provider

    Branch

    Provision of a local agent by a third-party service provider is allowed (but internal rules/insurance limitations may restrict law firm professionals from taking on this role).

    Proprietary company

    Allowed (but internal rules/insurance limitations may restrict law firm professionals from taking on this role).

    Public company

    Allowed, but internal rules/insurance limitations may restrict law firm professionals from taking on this role.

  • Nationality or residency requirements for shareholders, directors and officers

    Branch

    Must have at least one local agent – an Australian company or resident in Australia.

    Proprietary company

    Must have at least one director who must ordinarily reside in Australia. If a company has one or more company secretaries, at least one of them must ordinarily reside in Australia.

    There are no nationality requirements for shareholders.

    Public company

    Must have at least three directors, at least two of whom must ordinarily reside in Australia.

    Must have at least one company secretary, one of whom must ordinarily reside in Australia.

    There are no nationality requirements for shareholders.

  • Restrictions regarding appointment of nominee shareholders or directors

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    None.

    Public company

    None.

  • Summary of director's, officer's and shareholder's authority and limitations thereof

    Branch

    A local agent is answerable for the doing of all acts, matters and things that the foreign company is required by or under the Corporations Act to do.

    Proprietary company

    Board of directors has overall management responsibility. Shareholders have no direct management rights but to elect directors and may be required to approve significant transactions.

    Public company

    Board of directors has overall management responsibility. Shareholders have no direct management rights but to elect directors and shareholders may be required to approve significant transactions.

  • Public disclosure of identity of directors, officers and shareholders

    Branch

    Details of the foreign company's director(s) and local agent(s) are publicly available on ASIC's database.

    Proprietary company

    Full details of directors and shareholders are publicly available on ASIC's database.

    Public company

    Full details of directors are publicly available on ASIC's database. Although public companies are not required to advise ASIC of changes relating to individual shareholders, the share register must still be updated for all shareholders' changes.

  • Minimum and maximum number of directors and shareholders

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    There must be a minimum of one shareholder and a maximum of 50 shareholders, not including employee shareholders. For directors, there must be at least one director who must ordinarily reside in Australia.

    Public company

    There must be a minimum of one shareholder, and no maximum number. For directors, there must be at least three directors, at least two of whom must ordinarily reside in Australia.

  • Minimum number of shareholders required

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    One shareholder is sufficient.

    Public company

    One shareholder is sufficient.

  • Removal of directors or officers

    Branch

    Not applicable – a registered foreign company must always have a local agent who is responsible for any obligations that the foreign company must meet. If a local agent ceases, the foreign company must appoint another agent and notify ASIC of the removal and appointment via lodgment of a form.

    Proprietary company

    Generally, directors may be removed by shareholders.

    Public company

    Generally, directors may be removed by shareholders.

  • Required and optional officers

    Branch

    Nil.

    Proprietary company

    Nil.

    Public company

    A public company must have at least one company secretary.

  • Board meeting requirements

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    Formally nil, but there is usually at least one board meeting per year. Decisions of directors can be effected by a written resolution.

    Public company

    Formally nil, but there is usually at least one board meeting per year. Decisions of directors can be effected by a written resolution.

  • Quorum requirements for shareholder and board meetings

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    Unless otherwise specified in the company's constitution, at least two shareholders must be present for the full meeting. A company may pass a resolution without a general meeting being held if all the shareholders entitled to vote on the resolution sign a document containing a statement that they are in favor of the resolution set out in the document.

    Unless otherwise specified in the company's constitution, the quorum for a directors' meeting is two directors. The directors of a company may pass a resolution without a directors' meeting if all the directors entitled to vote on the resolution sign a document containing a statement that they are in favor of the resolution set out in the document.

    Public company

    Unless otherwise specified in the company's constitution, at least two shareholders must be present for the full meeting. A company may pass a resolution without a general meeting being held if all the shareholders entitled to vote on the resolution sign a document containing a statement that they are in favor of the resolution set out in the document.

    Unless the directors determine otherwise, the quorum for a directors' meeting is two directors and the quorum must be present at all times during the meeting. The directors of a company may pass a resolution without a directors' meeting being held if all the directors entitled to vote on the resolution sign a document containing a statement that they are in favor of the resolution set out in the document.

  • Must a bank account be opened prior to incorporation, and must the bank account be local?

    Branch

    Not necessary in order to register a foreign company.

    Proprietary company

    Not necessary in order to incorporate.

    Public company

    Not necessary in order to incorporate.

  • Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

    Branch

    A foreign company must lodge the following financial statements with ASIC once a year:

    • Balance sheet
    • Profit and loss statement
    • Cash flow statement, and
    • Any other document the company is required to prepare by the law of its place of origin

    Audit is generally not required but ASIC may request audited financial statements if previously lodged statements are insufficient.

    Proprietary company

    A company may decide where to keep the financial records, but if kept outside Australia sufficient written information must be kept in Australia to enable true and fair financial statements to be prepared.

    A small proprietary company does not have to have its accounts audited unless:

    • It is a disclosing entity
    • It is controlled by a foreign company and its financial results are not included in any consolidated accounts of the foreign company lodged with ASIC (some exemptions apply), or
    • It is required by 5% or more of shareholders or by ASIC to prepare audited financial statements.

    All other proprietary companies are required to have their accounts audited. The auditor must be registered in Australia. If various criteria are satisfied, foreign companies are entitled to apply to ASIC for relief from the requirement to have their accounts audited.

    Public company

    All public companies are required to have their annual financial statements audited. The auditor must be registered in Australia.

  • Requirement regarding par value of stock

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    Shares of a company have no par value.

    Public company

    Shares of a company have no par value.

  • Increasing of capitalization if needed

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    There is no concept of authorized or maximum capital. Increased capitalization can occur at any time.

    Public company

    There is no concept of authorized or maximum capital. Increased capitalization can occur at any time.

  • Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

    Branch

    Repatriation of funds may generally be undertaken at any time. There is no withholding tax payable on the remittance of branch profits to the foreign holding company.

    Proprietary company

    Funds can be repatriated by dividends or return of capital.

    Public company

    Funds can be repatriated by dividends or return of capital.

  • Restrictions on transferability of shares

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    A signed share transfer form is required to transfer shares (note: duty may apply).

    The constitutions of many proprietary companies contain pre-emptive rights which require that a transferor offers shares for transfer to other shareholders before those shares can be offered to third parties. Frequently, those constitutions will also give the directors the right to refuse to register a share transfer, without them necessarily being required to give a reason for a refusal to register.

    Public company

    Pre-emptive rights provisions are far less common in public company constitutions and cannot be contained in the constitutions of Australian Securities Exchange (ASX) listed companies.

    Shareholders' agreements may also provide restrictions on the transfer of shares, with such restrictions typically expressed to take precedence over restrictions found in the company's constitution.

  • Obtaining a name and naming requirements

    Branch

    A foreign company must determine that the business name it wishes to use in Australia is available and reserve that name with ASIC. Once registered, the foreign company must display its name in a conspicuous position and in legible characters outside every office and place of business in Australia that is open and accessible to the public.

    Proprietary company

    A new company must have a name that is different from the name of a company that is already registered. A proprietary company limited by shares must have the words "Proprietary Limited" or "Pty Ltd" as part of its name.

    Public company

    A new company must have a name that is different from the name of a company that is already registered.

    A public company must have the words "Limited" or "Ltd" as part of its name. A company must display its name prominently at every place at which the company carries on business and that is open to the public.

  • Summary of "know your client" requirements

    Branch

    Financial institutions, professionals working within the financial sector, bullion and gambling sectors as well as other regulated entities (ie, reporting entities) are required to satisfy their respective KYC obligations. Legal service providers may have their own internal KYC requirements.

    Proprietary company

    Financial institutions, professionals working within the financial sector, bullion and gambling sectors as well as other regulated entities (ie, reporting entities) are required to satisfy their respective KYC obligations. Legal service providers may have their own internal KYC requirements.

    Public company

    Financial institutions, professionals working within the financial sector, bullion and gambling sectors as well as other regulated entities (ie, reporting entities) are required to satisfy their respective KYC obligations. Legal service providers may have their own internal KYC requirements.

  • Approval requirements for amending charter document

    Branch

    Not applicable – this is subject to the requirements of the foreign company's place of incorporation.

    Proprietary company

    Any changes to a company's constitution must be made by a special resolution (ie, passed by at least 75% of the shareholders voting).

    Public company

    Any changes to a company's constitution must be made by a special resolution (ie, passed by at least 75% of the shareholders voting). For a public company, a copy of the resolution must be lodged with ASIC within 14 days after the special resolution is passed.

  • Licenses required to conduct business in jurisdiction

    Branch

    Apart from the usual tax registrations applicable to all trading companies, namely:

    • An Australian Business Number (ABN)
    • An Australian Tax File Number (TFN), and
    • Goods and Services Tax (GST) registration

    There are no general registrations, licenses or permits that are required to conduct business in Australia.

    Proprietary company

    Apart from the usual tax registrations applicable to all trading companies, namely:

    • An Australian Business Number (ABN)
    • An Australian Tax File Number (TFN), and
    • Goods and Services Tax (GST) registration

    There are no general registrations, licenses or permits that are required to establish a company or conduct business in Australia.

    Public company

    Apart from the usual tax registrations applicable to all trading companies, namely:

    • An Australian Business Number (ABN)
    • An Australian Tax File Number (TFN), and
    • Goods and Services Tax (GST) registration

    There are no general registrations, licenses or permits that are required to establish a company or conduct business in Australia.

  • Process of purchasing and utilizing a shelf company

    Branch

    Not applicable.

    Proprietary company

    A "shelf" company may be purchased from third party suppliers but given the speed and ease of incorporation this is rarely used.

    Public company

    A "shelf" company may be purchased from third party suppliers but given the speed and ease of incorporation this is rarely used.

  • Key contacts
    Jock McCormack
    Jock McCormack
    Partner DLA Piper Australia jock.mccormack@dlapiper.com T +61 2 9286 8253 View bio

Form of entity

Australia

Branch

It is possible for foreign companies to conduct business in Australia through a branch office. A foreign company can establish a branch in Australia by registering with ASIC as a foreign company carrying on business in Australia. It must also appoint a local agent who will be responsible for ensuring the foreign company's compliance with the Corporations Act.

Proprietary company

A proprietary company is a company designed for a relatively small group of shareholders. It is the most common type of company for smaller businesses and has the advantage of being simpler to manage and less expensive to administer. Managed by a board of directors which is responsible for making business decisions and overseeing the general affairs of the company. Directors are usually appointed and removed by the shareholders.

Public company

Similar in concept to a proprietary company but there is no limit on the number of shareholders. There is also no limit on the ability of a public company to raise funds from the public (subject to disclosure requirements).

Austria

Stock corporation (AG)

Separate and distinct legal entity. Managed by a management board, which is responsible for making major business decisions and overseeing the general affairs of the corporation as well as the day-to-day operations of the stock corporation. Members of the management board are elected by the supervisory board, members of the supervisory board are elected by the shareholders’ meeting.

Limited liability company (GmbH)

Separate and distinct legal entity. Managed by one or more managing director(s), who is (are) responsible for making major business decisions and overseeing the general affairs of the corporation as well as the day-to-day operations of the stock corporation. Members of the management board are elected by the shareholders’ meeting. In certain cases, a supervisory board must be established (the members of which are elected by the shareholders’ meeting).

Belgium

Limited liability company (société anonyme/naamloze vennootschap)

Separate and distinct legal entity. Managed by a Board of Directors, which is responsible for making major business decisions and overseeing the general affairs of the limited liability company. The directors are appointed by the general shareholders’ meeting of the limited liability company. The Board of Directors may also appoint a managing director or a general manager (who is not a director) entrusted with the daily management of the limited liability company.

Closed limited liability company (société privée à responsabilité limitée/besloten vennootschap met beperkte aansprakelijkheid)

Separate and distinct legal entity. Managed by one or more directors. The directors are appointed by the general shareholders’ meeting of the limited liability company. The concept of a managing director entrusted with the daily management does not exist with respect to a closed limited liability company.

Belgian branch office of a foreign company

No separate and distinct legal entity from the foreign company. The legal representative will have to represent the foreign company as regards the activities of its Belgian branch office.

Brazil

Limited liability company (Sociedade Limitada)

Sociedades Limitadas are regulated by Law 10,406/02 (Brazilian Civil Code) and residually, whenever set forth in their articles of organization, by Law 6,404/76, as amended, which regulates Brazilian corporations.

A Sociedade Limitada is simple to incorporate and operate, since very few formalities are required for its organization and management.

Corporation (Sociedade Anônima)

Legal entity suitable for several types of businesses and investments. Non-listed corporations are simple to incorporate and operate, but more formalities are required for its organization and management when compared to the Sociedade Limitada. One example is the mandatory publication of certain corporate acts.

Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors.

Canada

Corporate subsidiary (corporation form rather than flow-through form) 

Separate and distinct legal entity. May incorporate federally (under the Canada Business Corporations Act) or provincially (for example, under the Business Corporations Act (Ontario)). Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors.

China

Limited liability company (LLC)

Separate and distinct legal entity. Managed by a board of directors or an executive director (for companies with relatively few shareholders or with relatively small size of operation), which is responsible for making major business decisions and overseeing the general affairs of the company. Director or the executive director is appointed by the shareholders of the company. General Manager, who runs the day-to-day operations of the company, is appointed by the board of directors or the executive director.

Denmark

Kapitalselskab

There are three types of limited companies: Public limited companies, private limited companies and entrepreneur companies. They are all separate and distinct legal entities. A limited company is owned by the shareholders, and the shareholders meeting is the ultimate authority of the company. However, the shareholders mainly control the company by instructing and supervising the board of directors and/or the general manager. Only the company is liable to creditors for corporate debts, and once the share contribution has been paid, the shareholders have no obligation to contribute further to the capital of the company.

France

Société par actions simplifiée (SAS)

SAS is an increasingly used type of company, mainly because of its great flexibility and low capital requirements. SAS is a more flexible corporate form than the SARL which is a more binding vehicle. The SAS is essentially a simplified form of the SA. It has a number of advantages due to its flexibility such as:

  • The law does not impose a particular management structure for the SAS, and
  • There is greater freedom for organizing the management and operating structures of an SAS

SAS does not have access to the capital markets and its shares cannot be listed on a stock exchange.

Société à responsabilité limitée (SARL)

Easy to set up and operate. Relevant for small businesses. One or more directors, who must not be corporate entities, but do not need to be shareholders. The SARL is a widely utilized form of corporation in France, mainly due to the number of advantages it offers to small businesses, such as low capital requirements and simple rules and regulations. It is more restrictive and less flexible than the SAS but has the benefit of not requiring a statutory auditor if certain thresholds are not passed. Sweat equity permitted: a shareholder offers the company his time, work and professional knowledge (does not contribute to forming the capital but has right to shares in company: share of profits and participation in collective decisions).

SARL does not have access to the capital markets and its shares cannot be listed on a stock exchange.

Société anonyme (SA)

SA is an historical legal form mainly used by large corporations in France, as it enables public offering of shares. Tailored for large companies needing external capital by resorting to the market, it is a very complex form of company, not commonly appropriate for a first incorporation in France.

Branch of a foreign company

Under French law, an entity operating in France shall register with the French Registry of Commerce and Companies (RCS) only if it is conducting a “commercial activity.” A foreign company is only required to register with the local Registry of Commerce and Companies when its operations in France constitute a permanent establishment, where an autonomous activity (as opposed to “preparatory and auxiliary” activities) is being conducted and managed by an agent of the foreign company or a person who may bind the foreign company vis-à-vis third parties.

Under French law, the branch is a direct form of implantation in France of a foreign company. A branch is not a separate legal entity and is therefore deemed to be the same legal entity as the foreign company, which remains solely responsible for the operation of its branch in France.

The main difference between a French branch and a French subsidiary is that:

  • A branch is a mere emanation of the parent company in France, with no legal existence or distinct assets or liabilities
  • A subsidiary is an independent entity with its own legal existence, bylaws and capital contributions 

As a consequence, the parent company:

  • Has unlimited liability for any debts and liabilities incurred by the branch in France, and
  • Has limited liability for the debts and liabilities incurred by its subsidiary in case it becomes insolvent (ie limited to its initial capital contribution and the amount of any shareholder's loan which cannot be reimbursed within the context of a liquidation due to insufficiency of assets)

Germany

GmbH – limited liability company

The GmbH is a company for all kinds of business with a corporate organization and its own legal personality. The shareholders mainly control the company by instructing the managing directors. It has a share capital, which matches the sum total of the share contributions to be made by the shareholders. Only the company is liable to creditors for corporate debts. The legal frame allows individual formation to a certain extent.

Hong Kong

Limited private companies

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders or the board of the corporation. Officer could be appointed by directors to run the day-to-day operations of the corporation.

India

Private limited company

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the company. Officers, who run the day-to-day operations of the company, are appointed by the directors.

Ireland

Private company limited by shares (LTD)

Separate and distinct legal entity. Managed by a board of directors which has collective authority and is responsible for managing the affairs of the company. Subject to the constitution, directors can be appointed by resolution of the board or the shareholders. A LTD cannot offer their shares to the public and the right to transfer shares must be restricted by the company’s constitution. Shareholders have limited liability protection.

Private unlimited company (ULC)

Separate and distinct legal entity. Managed by a board of directors which has collective authority for and is responsible for managing the affairs of the company. Subject to the articles of association, directors can be appointed by resolution of the board or the shareholders. ULCs cannot offer their shares to the public and the right to transfer shares must be restricted by the company’s articles of association. Shareholders can be held liable for all the debts of the company in the event of an insolvent liquidation.

External company

A company with limited liability incorporated under the laws of another jurisdiction and which establishes operations in Ireland is obliged to register as an external company (ie a branch) in certain circumstances. The branch is treated as part of the same legal entity as the company. The requirement to register a branch generally arises where the Irish operations of the foreign company has authority to independently negotiate and contract directly with third parties on an independent basis. From an Irish perspective, the branch is not a separate legal entity to the “home” or “parent” company.

Israel

Company

Separate and distinct legal entity. Must be registered with the Israeli Registrar of Companies. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the company. Directors are appointed by the shareholders of the company. The general manager, if appointed (appointment is not required), is appointed by the board of directors and runs the day-to-day operations of the corporation. Other officers may be appointed.

Branch / representative office

A foreign corporation conducting business in Israel must register as a Foreign Company with the Israeli Registrar of Companies. The Foreign Corporation is regarded as the same legal entity as the Original Entity.

Italy

Società a responsabilità limitata (S.r.l.)

Separate and distinct legal entity. A S.r.l. can be managed by:

  • A sole director
  • A board of directors, composed by two or more members
  • Two or more directors acting jointly or severally

Directors can also be quotaholders. Directors are elected by the quotaholders with a proper decision.

Japan

Registered branch

This form is often used by foreign companies seeking to gain presence and do business in Japan without establishing a subsidiary. A foreign company must appoint at least one representative in Japan.

Kabushiki-Kaisha (KK)

A KK is distinct legal entity. KKs are most similar to C-corporations in other jurisdictions. The liability for shareholders is limited and the KK is a well-established structure. The KK may be established with or without a board of directors.

Godo-Kaisha (GK)

A GK structure is similar to an LLC in other jurisdictions. The GK allows more flexibility in regards to corporate governance and management decisions. The annual corporate governance requirements costs are generally lower as there are few formal corporate governance requirements that must be observed.

Luxembourg

Private limited liability company (Société à responsabilité limitée or S.à r.l.)

Separate and distinct legal personality. Managed by a manager or a board of managers responsible for making major business decisions and overseeing the general affairs of the company. Managers are elected by the shareholders and may represent the company acting alone, or as set out in the articles of association, if more than one is appointed.

Public limited liability company (Société anonyme or S.A.)

Separate and distinct legal personality. An S.A. can be organized as a one-tier company (ie managed by a sole director or a board of directors composed of at least 3 directors) or two-tier company (ie an executive board (directoire) and a supervisory board (conseil de surveillance). Directors are elected by the shareholders and may represent the company acting alone, or as set out in the articles of association, if more than one is appointed.

Special limited partnership (Société en commandite spéciale or SCSp)

Largely inspired by the Anglo-Saxon limited partnership regimes, the special limited partnership (SLP) has been designed to bolster Luxembourg’s position as the main alternative investment fund structuring hub in the EU at a time when the manager regulation is seen as a potential substitute for product regulation. With no legal personality, the SCSp is formed by written agreement for a limited or unlimited duration, between one or more general partner(s) (associés commandités) jointly and severally liable for the partnership's commitments, and one or more limited partner(s) (associés commanditaires) whose liability does not extend beyond their commitment. High level of contractual freedom and structuring flexibility characterize the SCSp as most of the relevant provisions applicable to the SCSp can be contractually set forth in the limited partnership agreement.

Mexico

S.A. de C.V.

Separate legal entity, independent from its shareholders. Two shareholders are required at all times. Shareholders meetings are the supreme organ of the corporation. Managed by a board of directors or a sole administrator, which is responsible for taking major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors or the shareholders meeting.

S. de R.L. de C.V.

Separate legal entity, independent from its partners. Two partners are required at all times. Partners meetings are the supreme organ of the company. Managed by a board of directors or a sole administrator, which is responsible for taking major business decisions and overseeing the general affairs of the company. Directors are elected by the partners of the company. Officers, who run the day-to-day operations of the company, are appointed by the directors or the partners meeting.

S.A.P.I. de C.V.

Separate legal entity, independent from its shareholders. Two shareholders are required at all times. Shareholders meetings are the supreme organ of the corporation. Managed by a board of directors, which is responsible for taking major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors or the shareholders meeting.

Netherlands

Branch office

Not a separate legal entity, it is a local office of a non-Dutch legal entity in the Netherlands (the head office).

B.V. (private company with limited liability)

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions, overseeing the general affairs and running the day-to-day operations of the BV. Directors are appointed by the shareholders of the BV. A BV can have a supervisory board of directors to supervise the policies of the board of directors and the general course of affairs of the BV and its affiliated business. It is also possible to create a so called -one-tier board, consisting of executive and non-executive directors.

Co-operative U.A.

Separate and distinct legal entity. Managed by a management board, which is responsible for making major business decisions, overseeing the general affairs and running the day-to-day operations of the Co-operative. Directors are appointed by the members of the Co-operative. A Co-operative can have a supervisory board to supervise the policies of the management board and the general course of affairs of the Co-operative and its affiliated business.

C.V. (a limited partnership)

A CV is not a legal entity under Dutch law. It is an (partnership) agreement between one or more general partners and one or more limited partners. The general partner has overall management and day-to-day responsibility. The partnership agreement can provide for the possibility that the partners elect a management committee, which will manage the day-to-day business activities of the CV and carry out the business and activities of the CV on behalf of the general partner in accordance with the power granted to them by the general partner.

Russia

Joint-stock company (public and non-public)

A commercial organization the charter capital of which is divided into a definite number of shares. Shares qualify as securities in the meaning of Russian law. The shareholders of the company are not liable for the obligations of the company and bear the risk of losses in connection with the company’s activity within the cost of shares in their possession.

Managed by the general shareholders' meeting (the highest governing body of the company) which is responsible for major decisions regarding the company – amending the charter, reorganization and liquidation, distribution of profit, approving annual reports and some deals etc.; by the executive body (managing director or managing director and directorate) which is responsible for day-to-day activities of the company and by the board of directors, which is responsible for overseeing the general affairs of the company.

The company may also opt to have two or more managing directors who may act separately or jointly.

In a company with less than 50 shareholders the charter of the company may provide that the functions of the board of directors of the company shall be carried out by the general shareholders' meeting.

Limited liability company

A commercial organization the charter capital of which is divided into participatory interests. Participatory interests do not qualify as securities in the meaning of Russian law. The company members are not liable for the obligations of the company and bear the risk of losses in connection with the company’s activity within the cost of the contributions they have made.

Managed by the general members' meeting (the highest management body of the company) which is responsible for major decisions regarding the company – amending the charter, reorganization and liquidation, approving annual reports etc., by the executive body (managing director or managing director and directorate) which is responsible for day-to-day activities of the company and, in some cases, by the board of directors, which is responsible for overseeing the general affairs of the company.

The company may also opt to have two or more managing directors who may act separately or jointly.

Saudi Arabia

Limited liability company

A limited liability company is a popular corporate vehicle among foreign investors in Saudi Arabia. The personal liability for each of the partners/shareholders is limited to the individual partner’s contribution to the company’s share capital.

Singapore

Limited liability company 

Separate and distinct legal entity with limited liability for its members. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Appointment of directors is generally left to the company’s Constitution as the CA does not prescribe the manner in which directors are to be appointed and they are typically nominated by the shareholders of the Company. Favorable single tier taxation regime proves to be advantageous to shareholders.

South Korea

Joint-stock company (Jusik Hoesa)

Separate and distinct entity.

  • Shareholder meeting is the ultimate decision-making body and determines fundamental matters
  • Board of directors, which is comprised of directors who are elected at shareholder meeting, decides important matters related to daily operations of the company not specially reserved for determination by shareholder meeting
  • Representative director or executive officer, who is elected by the board of directors, is the administrative arm responsible for implementing the decisions of shareholder meeting and board of directors with authority to bind the company, and
  • Statutory auditor(s) supervise(s) the management of the company’s business and audits the company’s accounts

Limited company (Yuhan Hoesa)

  • Member meeting is the ultimate decision-making body and determines fundamental matters
  • Directors, who are elected at member meeting, decide important matters related to daily operations of the company not specially reserved for determination by member meeting by majority vote of directors
  • Director (in case a limited company has one director) or representative director who is elected at member meeting (in case a limited company has two or more directors) is the administrative arm responsible for implementing the decisions of member meeting and directors with authority to bind the company, and
  • Statutory auditor(s) (if any) supervise(s) the management of the company’s business and audits the company’s accounts

Spain

Branch

Secondary establishment, subordinated to a headquarters, with permanent representation and certain degree of autonomy, through which the principal company’s business is totally or partially carried out. The board of directors of the headquarters will be competent to determine the creation of a branch as well as its cancelation or change of location.

Joint-stock company

Separate and distinct legal entity. Managed by a board of directors or a sole director or joint directors or joint and several directors. The board of directors is responsible for making business decisions and overseeing the affairs of the company. Directors are elected by the shareholders of the company. Executive Committee and Managing Directors are only appointed if there is a Board by its directors and require delegation of Board powers.

Limited liability company

Separate and distinct legal entity. Managed by a board of directors or a sole director or joint directors or joint and several directors.  The board of directors is responsible for making business decisions and overseeing the affairs of the company. Directors are elected by the shareholders of the company. Executive Committee and Managing Directors are only appointed if there is a Board by its directors and require delegation of Board powers.

Sweden

Aktiebolag (AB) 

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the shareholders of the AB. The managing director (optional in private AB:s, required in public AB:s), who runs the day-to-day operations of the AB, is appointed by the board of directors. Signatory power is resolved by the board of directors. Other officers are appointed by the board of directors or by the managing director.

Switzerland

Stock corporation

Legal form intended for large-sized companies with high capital requirements, but also popular among smaller companies. The identities of shareholders are not published in the commercial register. Managed by a board of directors, which is elected by the general meeting of shareholders. The articles of incorporation can limit the transferability of a company’s shares.

Taiwan

Company limited by shares

A company limited by shares must carry on profit-seeking business, and is a separate and distinct legal entity whereby its capital is divided into shares. The company must have at least three directors and one supervisor, and the company is managed by the board of directors and the chairman (also a director), who is elected by the board. A foreign investor must file a foreign investment application (FIA) with the Investment Commission and upon approval establishes a company (FIA company) in Taiwan.

On June 15, 2015, a special section on "Closely-Held Company" (CHC) was added to Chapter 5 (Company Limited by Shares) as a result of the amendments to the Company Act. The purpose is to encourage the growth of startups and small and medium enterprises and to accommodate the unique needs of tech startups. The amendments aim to create more autonomy for those small or medium companies and to increase the flexibility in share ownership arrangement and business operations of CHC. The unique features of CHC are marked under the heading “CHC” below.

Limited company

Another type of profit-seeking enterprise that can be established is a limited company, which is owned by members and their respective ownerships are stated in terms of the amount of the members’ capital contributions. A foreign investor may file an FIA with the Investment Commission and upon approval establishes an FIA company in Taiwan. A limited company has less corporate formalities than a company limited by shares. For example, a limited company needs to only have one director, and does not have a board of directors nor hold shareholders’ meetings.

United Arab Emirates

UAE LLC

Separate and distinct legal entity. Requires 51% of the total shareholding to be owned by a UAE national or a company wholly owned by UAE nationals (subject to limited scenarios where all the shareholders are nationals of the Gulf Cooperative Council countries).

FZ-LLC

Separate and distinct legal entity. No restriction on the nationality of shareholders. Activities restricted to the free zone in which the company is incorporated and those the company is licensed to carry out.

United Kingdom

Private limited company

Separate and distinct legal entity. Managed by directors who are responsible for making major decisions and overseeing the general affairs of the company. Subject to the articles of the company, the shareholders and the board of directors generally have the power to appoint and remove directors.

Registered UK establishment

On 1 October 2009, new UK legislation replaced the dual regime of registering branches and places of business with a single regime of registering a UK establishment. A registered UK establishment is a UK registration of an overseas company. It has no separate legal personality to the overseas company. The overseas company continues to be managed by the directors and shareholders of the overseas company.

A number of responses in this checklist are “Not applicable” on the basis that the UK establishment is merely a registration of an overseas company and therefore any rules, regulations are other requirements are primarily governed by the laws of the country of incorporation.

United States

C corporation

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the stockholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors.

S corporation

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the stockholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors.

Limited liability company (LLC)

Separate and distinct legal entity. Managed by either the members of the LLC or a manager appointed by the members. Members of the LLC have flexibility in structuring the company, including the ability to divide ownership and voting rights in multiple ways.