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Starting a company is no easy task. Likewise, there is a range of things you should consider before you even apply to register your company. Once you undertake all the necessary steps to start a company, you will also need to maintain your corporate status. This article will take you through how you can gain and maintain your corporate status.
Getting Corporate Status
There are a few key steps required to obtain corporate status. We outline the three main steps below.
1. Prepare for Incorporation
To register a company, you will first need to prepare adequately. This includes deciding if a company structure is right for you. A company is a separate legal entity that will enable you to take advantage of limited liability. If you operate a small business seeking a simpler, more inexpensive option, you might want to consider other business structures, such as a sole proprietorship or a partnership.
In the preparation stage, you will also need to determine how your company will operate. You should consider how you will govern your company. For example, will you rely on the Corporations Act’s replaceable rules or prepare a written constitution instead? See the Australian Securities and Investments Commission’s (ASIC) website for more information about replaceable rules.
2. Understand Your Obligations
Before registering your company, you should understand your duties and obligations as a director of a company. In addition, you will have several legal obligations that you should meet, largely relating to acting in the best interests of the company and its shareholders.
Further, you will also need to ensure that you keep your company details up to date, maintain company records, and pay the appropriate renewal fees when required.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
3. Register Your Company
When you are ready to register your company, you must obtain consent from officeholders and company members. Further written consent will need to be obtained from the company directors, secretaries, members and the owner of your company’s registered office address.
Once you finalise your application, you will receive an Australian Company Number (ACN) and a certificate of registration.
Maintaining Corporate Status
Once you have started a corporation, you will need to ensure you operate it properly to maintain your corporate status. We explore three essential steps you can take.
1. Hold Meetings
It is a legal requirement that companies hold annual shareholders meetings. In conjunction with regular directors’ meetings, these meetings can ensure that the company’s business activities are being reviewed regularly.
These meetings provide an opportunity to:
- vote on the introduction and amendment of new processes;
- vote in new company directors; and
- approve the sale of corporate assets.
Holding meetings ensures that the company operates per shareholders’ wishes and therefore meets the legal requirements to maintain corporate status.
2. Maintain Records
Maintaining accurate records is another crucial way to maintain corporate status. It is a legal requirement that you record corporate meetings and document the decisions of shareholders and directors. Minutes provide an accurate record of company strategy and votes, ensuring accountability in the instance of an audit.
In addition to minutes, you must maintain detailed financial records. This ensures an accurate record of changes in the company’s financial value, ensuring that the company can remain solvent and therefore not breach any fiduciary duties. Your company must keep its financial records for seven years before you can destroy them.
3. Uphold Your Obligations
It is also essential that the directors, shareholders and officers of a company uphold their obligations. This includes ensuring a separation of business and personal finances to avoid breaching any fiduciary duties. Therefore, ensure that all documents on behalf of the corporation are signed off on behalf of the corporation itself, rather than in an individual name. By ensuring all members understand and continue to meet their obligations, you can maintain corporate status.Continue reading this article below the form
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Whilst obtaining corporate status is important, maintaining your corporate status is just as crucial. To obtain your corporate status, you will need to:
- prepare for incorporation;
- understand your obligations; and
- register your company.
Further, to maintain corporate status, you will need to:
- hold regular meetings;
- maintain company records; and
- uphold your corporate obligations.
If you need assistance obtaining your corporate status, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
To obtain corporate status, you must first prepare for incorporation by determining that a company structure is the best fit for your business. You should also determine how your company will operate. Secondly, you will need to understand your duties and obligations as a company director, secretary or member. Finally, you will need to complete the necessary tax, business and licencing registrations.
To maintain corporate status, you will need to ensure that you hold meetings to ensure that the company’s business activities are being reviewed regularly. First, holding meetings is a legal requirement. Secondly, you should maintain accurate records relating to these meetings and the company’s finances. Finally, ensure that you understand and are meeting all obligations.
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