Who Can’t Incorporate a Company in Australia?

Incorporating a company isn’t always as simple as counting 1, 2, 3. There are some hidden hurdles that you may be unaware of which prevent you from registering and managing a company in Australia.

The Corporations Act 2001 (Cth) provides that a director must be over the age of 18 and a proprietary (private) company must have at least one director who ordinarily resides in Australia. Additionally, a public company must have at least three directors with a minimum of two directors ordinarily residing in Australia.

There are also number of additional automatic disqualifications which may prevent you from managing your corporation, including prior convictions, bankruptcy, personal insolvency agreements or foreign court orders.

Convictions

You can be automatically disqualified from managing a corporation if you are convicted of an offence that:

1. concerns the business of the corporation;
2. concerns the corporation’s financial standing;
3. is punishable for a period greater than twelve months;
4. involves dishonesty and is punishable by imprisonment for at least three months; or
5. is against the law of a foreign country that is punishable by imprisonment for a period greater than twelve months.

In the event that you commit an indictable offence but were not imprisoned, you will be disqualified from incorporating an Australian company for five years from the date of your conviction. If you did serve a term of imprisonment, the disqualification period commences five years from the day after your release from prison.

Bankruptcy or Personal Insolvency Agreement

You will also be automatically disqualified from managing corporations if you are an undischarged bankruptee, that is your financial affairs are currently managed by a bankruptcy trustee, or you have executed a personal insolvency agreement and the terms of the agreement have not been fully complied with.

Foreign Court Orders

You will be disqualified from managing a corporation if you have been disqualified in a foreign country from managing or directing a foreign company or have committed passport fraud.

The Australian Securities and Investments Commission (ASIC) can apply to the court to have an automatic disqualification extended by up to an additional fifteen years. ASIC can only apply once and it must be before the end of the first year of the disqualification. However, you may be able to apply for leave to the courts or to ASIC in order to manage a corporation despite your disqualification.

Next Steps

Are you concerned that your history prevents you from incorporating a company in Australia? Contact our team of expert commercial lawyers on (02) 9964 0499 for a no-obligation consultation.