Doing business in the country needs a business vehicle, legally registered by the register and allowed to carry out commercial activities within the territory. There are two business entities commonly established in the country. They include Privately Owned Companies (Pty Ltd Company) and Trading trusts. It is governed by law and the trust deed. It has no legal personality and requires an appointed trustee with a legal personality, be it a person or a corporation. The maximum duration it can exist is 80 years in various states and territories in the country. They are usually governed by deeds, while the Corporations Act applies to corporate trustees. Though trustees are liable for the debts of their trusts, they are usually entitled to indemnification of the trust property for liabilities incurred. They cannot be publicly held but may be used as a vehicle for non-profit or charity organizations.
If you are interested in establishing one or you are thinking of setting up a trading trust in the territory, this guide provides information on how to register it in Australia and its process of incorporation.
Types of trusts
A trust may buy assets from any foreign entity. Foreign entities can also acquire assets from a trust or acquire units in it. This is subject to approval from the Foreign Investment Review Board. The following are the kinds of trusts allowed to be formed:
- Family
- Unit
The process of incorporation
Incorporation is quite simple and easy to carry out here. The Australian Securities and Investments Commission maintains a publicly available database that contains certain details about the trust. The process of registering a trust includes preparing the required documents, filing an application with the register, and attaching these documents:
- trust deed (stamped for duty upon establishment
- Evidence of involvement of notary, company register, governmental authorities
Time of the process
The duration of the process depends on the type of trust. A unit trust wholly owned by a foreign parent takes a few days to register. The entities are usually incorporated after the trustee and beneficiaries have been duly identified.
Cost of the process
The only costs incurred are the legal fees for preparing the trust deed. An additional cost may occur. This is known as a duty, though duty in most states is considered a nominal fee.
Features of a trust
During registration, it requires a minimum of one trustee to exist. A unit trust requires at least one unitholder while a family trust needs no less than one beneficiary to set up. All trusts must have trustees, unitholders, or beneficiaries depending on the type of trust. In the case of the trustee being a corporation, it must meet the requirements of an Australian company. Setting up a family trust requires a nominal amount of property held in the trust. In the case of a unit trust, there must be an amount of paid-up capital. The trading trust requires a Tax File Number for tax purposes and an Australian Business Number issued by the Australian Taxation Office. If a trust has a corporate trustee, the information of the trustees will be made publicly available on the register.
Information to be provided by incorporators
The following information should be filed with the registry during registration and made publicly available:
- Liens and encumbrances are usually registered on the Personal Property Securities Register
- Details of the trustees, unitholders, or beneficiaries
- Details of the trust
- Trust deed, et cetera
Note that private information about the trustees or beneficiaries such as their dates of birth is not made available to the public.
