ASIC Regulation of Australian Companies

This assignment analyzes the functions and impact of the Australian Securities & Investments Commission (ASIC) in regulating Australian businesses. It explores how ASIC facilitates company formation through ACN and ABN applications, the issuance of certificates of Incorporation and corporate keys, and the process for listing securities. The assignment also highlights ASIC's role in enforcing compliance, particularly regarding foreign entities engaging in joint ventures with domestic companies and the registration requirements for trusts. It emphasizes ASIC's commitment to strengthening legal frameworks to protect investors and combat fraudulent business practices.

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Incorporating company

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Table of Contents
Task-1..........................................................................................................................................................2
Procedure to incorporate a small proprietary company............................................................................2
Task-2..........................................................................................................................................................6
Role of the Australian securities exchange in society..............................................................................6
Part-3...........................................................................................................................................................8
Investigation of listing rules and regulation.................................................................................................8
Task-4........................................................................................................................................................11
Role played by Australian Security Investment commission in regulating company’s behavior...........11
References.................................................................................................................................................13

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Task-1
Procedure to incorporate a small proprietary company
It is considered that incorporating a small proprietary company there are many formalities
which have to be complied by promoters. Here are some following steps to incorporate a
company with the ministry of government.
Step-1
Firstly, promoters need to decide which type of company need to be incorporated. After
that business structure of the desire company need to be decided. The company must desire to do
a legal business throughout Australia. Therefore, taking care of corporate taxes or limited
liability should be done. There is a huge difference between registering a company and
registering a business name (Brimble & Blue, 2013).
There are different types of companies which we can be applied for registration.
 Not profit or charitable trust.
 Special Purpose Company.
 Registered Australian bodies.
Step-2
In this, promoters need to choose the name of the company. There are few things which should
be considered while making application for availability for the name of the company. A
company cannot be incorporated with the name which is unwished or which is tantamount with
or resembles with the name of any existing company. For the availability of the name of the

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company we have to apply to the same to the name availability. If anyone is the holder of the
identical name then such person may able to incorporate with the name in some circumstances.
There are only some characters which can be used with the name of the company. There are also
some words and phrases which can be used only after the permission of the ministry of
government. Some of them are (Rahman, 2013).
 Bank
 Royal
 Trust
 Incorporated
Some words are also cannot be used while incorporating company which may mislead people
about company’s business. It may involve the Royal family, association with government or any
ex-servicemen’s organization. A company can reserve its name by giving application whether
such company yet not started its business. Such name can be reserve only for a period of two
months and if a company wants to reserve such name for a period of more than two months then
company needs to apply again for that. Ministry cannot reserve name for a long period of time it
may prevent other people to use of such name. The name of the company cannot be similar with
the registered Trade Mark or a Trade Mark which applied before the ministry. The name of the
company must end with the word ‘Proprietary Limited’ or ‘Proprietary’. In case the liability of
the member of the company is limited to the unpaid amount then it is end its name with
‘Proprietary Limited’ and if member’s liability is unlimited then its name must end with
‘Proprietary’. There are also some abbreviations which can also be used with the name of the
company (Butlin, 2013).

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Step-3
Before incorporation promoters need to decide how company will be governed. A company can
be administered by three ways:
 Replaceable Rules
 Own Constitution, or
 Combination of both.
Replaceable rules are provided in Corporation Act. These are the established rules which can
manage the company. If any company does not want create its business constitution then it can
use the replaceable rules. Having replaceable rules means a company is not required to write
their constitution and do not need to update them time to time.
A company can also choose the option of having written constitution for that company is
required to write its business constitution and copy of that constitution must keep in company’s
record every time.
In case when a proprietary company has only one officeholder then company is not require to
adhere replaceable rule or written constitution. But when the company appoints another member
or director then it is require adopting replaceable rule but later on it can be converted to a
constitution (Gunningham & Sinclair, 2017).
Proprietary company can only invite investments from members, employees or
subsidiaries of the company and cannot regulate any business activity which requires divulgation
to investors.

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Step-4
A written consent must be given from the following persons:
 Director (Above 18 of age)
 Secretary (Above 18 of age)
 Member (there must be at least one member in the company)
One director or secretary must be resident of Australia.
A company must have its registered office. If there is no registered office then written
permission for concerned address must be taken. Company doesn’t need to send written consent
copy instead of that keep it on to register record (Popova, et al.2013).
Step-5
There are two way to registered a company
 A company can contact to a private service provider which may help to register your
company. They uses such software which directly access to ASIC’s systems. Private
Service provider may take some particular amount for registering the company.
 A company can directly registered with the ASIC by filling “Form 201” Application for
registration as an Australian company and mail such form to
Australian Securities and Investments Commission
PO Box 4000 Gippsland Mail Centre VIC 3841
Company must fill such form and sign it with fees.

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Task-2
Role of the Australian securities exchange in society
With the ramified economic changes and increasing complexity of capital market,
Australian securities exchange in society engaged in generating confidence in operations of ASX
is reinforced across all trading venues and clearing settlement facilities with the collaboration of
Reserve Bank of Australia’s oversight of financial system (Hartnett & Romcke, 2015). In
addition to this, the main role of Australian securities exchange in society is related to controlling
several negative acts such as insider trading, destruction of capital market, putting cap on the
market capitalization, market making. However, compliance of listing agreement and issuing the
new rules and regulation is done by Australian securities exchange for the betterment of the
society (Ali, et al. 2014). It is evaluated that when big companies wants to enter into cartel or
some business combination in the market then it is for mostly controlled by the Australian
securities exchange in society in the market. Furthermore, interest rate of the market is controlled
and fixed by the reserve bank of Australia with the collaboration of Australian securities
exchange in society. This level of process system not only put cap on the inflation but also
controls the flow of cash in financial and capital market. Legal compliance of ethical business
functioning of companies in Australia, is highly depends upon the rules and regulations issued by
Australian securities exchange in Australian. However, some of the ill-intentioned persons enter
into market making process with a view to create unwanted profit in market (Harris, Hargovan &
Adams, 2013). This Australian securities exchange in society put surveillance on the market to
save investors from the all the risk. However, listing rules, regulations and compliance of the
same by the listed companies are assessed by Australian securities exchange in market. When the
company is registered with ASIC make sure that the name of the company must be displayed

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whenever conducting the business. Every document must be displayed its ACN/ABN number on
the documents. All the documents and details are updated time to time to Australian Securities
Exchange. In addition to this, the present and future directions of the entity must be responsible
and directed by the instructions given by Australian Security exchange for the betterment of
society. Moreover, the trading policies and other issued rules are used by Australian Stock
Exchange to regulate the market. It is observed that society is accompanied by the shareholders
and investors and it is the prime duty of Australian Security exchange to control the fluctuation
in market. However, it is considered that all the investment made by investors is subject to
market risk (Agnew, 2013).

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Task-3
Investigation of listing rules and regulation
Listing Rules:-
Requirements to get their securities registered with ASX Listing.
To apply their security to be listed with ASX listing an entity is required to satisfy following
conditions-
 Fabrication and operations of the company is appropriate for listing requirements.
 Their shall be a written constitution or appendix 15A or 15B included (as required) and
prospectus of security or PDS lodged with the ASIC and consent of ASX must be taken.
 For foreign entity that must be registered with corporation Act. If an entity is a Trust then
it must be registered or an exemption is taken from ASIC for registration. Exemption
holding entity must be an Australian company or any foreign company registered in
Corporation Act (Rahman, 2013).
 Admission of free float at the time in its official list must be not less than 20%. There
shall be not less than 300 nonaffiliated security holders and not less than the value of
$2000
 If the entity is avail assets from promoters or from relatives, 2 years preceding the date of
application than consideration must be restricted to some grounds.
 The entity has option to choose exercise price for the security not less than 20% in cash.
 An authorize persons should be appointed who is authorize and communicate with ASX
for listing the security.

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 The documents in writing which is agreed by the entity and any other documents send to
ASX electronically.
 An entity is required to provide all its area on which it may operate and to what extend it
will go. ASX will provide recommendation to follow and if such recommendation is not
followed by the entity then suitable reason must be given for that.
 An audit committee must be stabiles for those who are covered in S & P all ordinaries
Index. All the recommendation given by the ASX corporate governance council must be
followed regarding audit committee and composition if covered in S & P/ ASX 300
Index. S & P/ASX 300 Index covered entities are require constituting remuneration
committee consisting of non- executive directors.
 The entity is the going concern business and doing same business during the last 3
preceding financial years ‘(Farrar, 2008).
 Accounts must be audited of last 3 years. From the audited accounts of the financial years
entity should apply within 90 days. Audited accounts of the entity must be given for the
last half year if entity goes for admission before 75 days or more than 6 months when
accounts of last financial year send it to ASX. A current financial position status of the
company must be provided by the registered auditor firm or by the individual accountant.
 Profit of the company for consistent period of last three financial not less than $1 million.
 The company has not less than $4 million after deducting costs of fund rising as its Net
tangible assets and market capitalization not less than $15 million. (Entity must not an
investment entity)
 Total tangible assets of the entity must not be more than half as a cash or easily
convertible to cash. If entity has its tangible assets half or more than half then entity has

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to make commitments that excess portion should spend to business objects. Business
objects of the entity must clearly state (Rahman, 2013).

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Task-4
Role played by Australian Security Investment commission in regulating company’s
behavior
Australian security investment commission is an independent Australian government
body that act as Australian corporate regulators. This commission indulged in controlling the
investment market such as capital and financial market with a view to reduce the complexity and
cumbersome process of Australian stock market (McQueen, 2016). There are several companies
who indulged in market making or insider trading with a view to increase their share price.
Therefore, Australian security investment commission prepares investment policies and regulates
compliance of companies related to the listing rules and regulations. It is observed that if
company wants to increase the overall effectiveness in market then they have to comply with all
the listing rules and corporation laws. It is observed that Australian security investment
commission regulate the investment market and ethical business functioning of companies in
market for the betterment of investors (Butlin, 2013). Australian security investment commission
keep surviliance on the merger, amalgamation and disclosure requirement of companies and
regulating trading system of Australian market in capital and financial market. In addition to this,
other acts are also done by Australian security investment commission with a view to comply
with the incorporation acts of companies. It is evaluated that after processing the application
Australian security investment commission provides ACN and which can be used by companies
to apply for ABN. Afterward, Australian security investment commission sends the certificate of
Incorporation. ASIC also send a corporate key. It is a unique number which helps to create
online account and for updating details. It is also observed that all the companies listed needs to
get permission for quotation of its security for its main class of security. This level of process

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system is implemented by Australian security investment commission to strengthen the legal
compliance and saving investors from the scams and other negative business functioning of
organization. Furthermore, Australian security investment commission also regulates the
corporate behavior of foreign entity. This foreign entity after entering into joint venture with the
domestic company must be registered under corporation Act. If an entity is a trust then it must be
registered or an exemption is taken from ASIC for registration. This has shown that Australian
security investment commission has made more strengthen rules and regulations for foreign
companies while taping the Australian market for the business purpose. It is also evaluated that
Australian security investment commission has developed software which directly access to
ASIC’s systems. All the companies listed will report to Australian security investment
commission through this ASIC’ system.

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References
Agnew, J. (2013). Australia’s retirement system: Strengths, weaknesses, and reforms. Center for
Retirement Research Issue Brief, 13-5.
Ali, P., Anderson, M. E., McRae, C. H., & Ramsay, I. (2014). The financial literacy of young
Australians: An empirical study and implications for consumer protection and ASIC's
National Financial Literacy Strategy.
Brimble, M., & Blue, L. (2013). Tailored financial literacy education: An indigenous
perspective. Journal of Financial Services Marketing, 18(3), 207-219.
Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge
University Press.
Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge
University Press.
Butlin, N. G. (2013). Investment in Australian economic development, 1861-1900. Cambridge
University Press.
Farrar, J. (2008). Corporate governance: Theories, principles and practice. Oxford University
Press.
Gunningham, N., & Sinclair, D. (2017). Leaders and laggards: next-generation environmental
regulation. Routledge.
Harris, J., Hargovan, A., & Adams, M. A. (2013). Australian corporate law(Vol. 2). LexisNexis
Butterworths.
Hartnett, N., & Romcke, J. (2015). The predictability of management forecast error: A study of
Australian IPO disclosures.
McQueen, R. (2016). A Social History of Company Law: Great Britain and the Australian
Colonies 1854–1920. Routledge.
Popova, T. T., Georgakopoulos, G., Sotiropoulos, I., & Vasileiou, K. Z. (2013). Mandatory
disclosure and its impact on the company value. International business research, 6(5), 1.
Rahman, A. R. (2013). The Australian Accounting Standards Review Board (RLE Accounting):
The Establishment of Its Participative Review Process. Routledge.
Rahman, A. R. (2013). The Australian Accounting Standards Review Board (RLE Accounting):
The Establishment of Its Participative Review Process. Routledge.

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