Doing Business in Australia

Transcription

1 Doing Business in Australia 2017

2 2 To the potential investor Australia has shown itself to be an exceptional place to do business, with a resilient economy, and well developed infrastructure, and is well positioned to provide a gateway into the fast growing areas of China and South East Asia. Foreign investment is welcomed in Australia. We at Holding Redlich would welcome the opportunity to help you either establish a business here or facilitate a transaction you are considering with an Australian entity. This publication aims to provide you with a basic guide to doing business in Australia. Don t hesitate to contact us for more detailed professional advice tailored to your specific circumstances. Our contact details are set out at the back of this guide. Chris Lovell Chairman Ian Robertson National Managing Partner

3 Doing Business in Australia 3 Background Government Australia is an independent and stable democracy. It is a federation established by a written Constitution. It comprises a federal government (based in Canberra), six states (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania) and two territories (Northern Territory and the Australian Capital Territory). The federation of Australia and each of the states and territories are governed by parliaments based on the British model. The Australian parliament is elected by all Australians over 18 and voting is compulsory. Voting is also compulsory for all people over 18 for the state and territory parliaments. The powers of the federal government (known as the Commonwealth) are specified in the Constitution. They include finance, direct taxation (such as income tax), trade, foreign affairs, immigration, social security, corporations, communications, banking and intellectual property. The states and territories remain responsible for any governmental function that is not specified in the Constitution as a responsibility of the Commonwealth. However, the states have ceded additional powers to the Commonwealth including major areas of health and education (including higher education). Each state is divided into local council areas which are managed by an elected council (again, with compulsory voting). The councils responsibilities including town planning, control of building and development and the provision of services to residents within its area. The federal, state and territory governments all operate on the separation of powers principle. Under this principle there are three branches of the government: the legislature (parliament) that makes the law; the executive (the public services directed by government ministers) that administers the law and the judiciary (courts) that interprets and enforces the law. This principle ensures that no one branch of government has absolute power. There are three main political parties in Australia the Liberal Party; the National Party and the Australian Labour Party (ALP). There is also a smaller fourth party the Greens whose focus is on the environment. At the federal level (and in most states) the Liberal and National Parties act in coalition (generally called the Coalition) in which the National Party, which represents principally rural interests, is the junior party. The Coalition is regarded as the conservative side of politics while the ALP is regarded as being on the left. Both the Coalition and the ALP have held government for significant periods. The Coalition was successful in the 2016 election and is currently in power federally with Malcolm Turnbull as Prime Minister. The ALP forms the government in South Australia, Queensland and Victoria. The Coalition is in power in the other States and the Territories.

4 4 Legal System The Australian legal system is based on the British legal system. There are two sources of law. The first is statute law which is law created by legislation enacted by a parliament. It is important to appreciate that laws made by the federal parliament apply throughout Australia while laws made by a state or territory parliament apply only in that state or territory. It is also important to understand that the laws of the states and territories are not always harmonised and that different laws governing the same activity (such as town planning) will apply from state to state. The second source of law is the common law, which is the law developed by the courts through the decision of judges over cases over the years. Common law is based on precedent which means that the decision of a senior court binds a lower court. This is intended to, and usually does, ensure consistency in court decision making. The common law applies to all of Australia but can be, and often is, overridden by federal and state statute law. The Australian court system mirrors its parliamentary system. There are federal courts and state and territory courts. The senior federal courts are the High Court and the Federal Court. The High Court is the highest court in Australia and its decisions are binding on every other court. The High Court only considers appeals (with one exception) and decides what appeals it will hear. The Federal Court has jurisdiction over all matters conferred on it by the Commonwealth parliament. These include corporate, competition and taxation disputes. The Federal Court can also deal with common law matters (which, broadly speaking, are disputes that do not arise from or involve legislation) when they are included in claims based on Commonwealth law. The Federal Court also hears appeals from lower courts and tribunals in the federal jurisdiction. There is no monetary limit on matters that the Federal Court may consider. The six states and two territories each have a Supreme Court which is the senior court in the state or territory. A Supreme Court can generally consider any dispute, other than disputes which involve issues that may only be considered by the Federal Court. A Supreme Court is usually divided into divisions (or lists ) which deal with particular types of disputes (for example building and construction disputes) which usually require a specific expertise. In each state and territory there are usually two levels of courts below the Supreme Court. These are, at the next level down from the Supreme Court, District or County Courts and, at the next level, Magistrates or Local Courts. A judge usually presides over a second level court while either a magistrate or justice of the peace presides over a lower level court. In addition, all jurisdictions have established tribunals to hear appeals against government decisions, administer particular areas of business (such as industrial relations) or administer particular laws (such as planning laws or retail tenancy laws).

5 5 Business Structures Companies A company is an association of a number of persons with a common object or objects. Companies are regulated by Commonwealth legislation, the Corporations Act 2001 (Cth) (Corporations Act). There are, broadly, two types of companies: proprietary companies public companies. The most commonly used form of proprietary company is a company limited by shares, although there are also unlimited proprietary companies. Proprietary companies limited by shares are private companies with a maximum of 50 nonemployee shareholders, meaning shareholders that are also company employees do not count toward the 50 shareholder limit. The benefit of forming a company limited by shares is that it limits the liability of its members to their respective shareholding. Proprietary companies limited by shares are restricted in how they can deal with their shares and a proprietary company cannot issue invitations or offers to the public to subscribe for its shares or debt instruments. If a proprietary company contravenes the Corporations Act restrictions regarding the number of non-employee shareholders it has, or the issue of shares or debt instruments to the public, the corporate regulator, the Australian Securities and Investments Commission (ASIC) may require the company to convert to a public company. Proprietary companies enjoy a number of advantages over public companies with respect to set-up formalities, including: no requirement to have more than one director who resides in Australia no obligation to hold an Annual General Meeting (AGM) no obligation to appoint a company secretary. Any company that is not a proprietary company is a public company. This includes a body corporate incorporated in a state or territory which is included in the official list of a securities exchange. Types of public companies include those limited by shares, limited by guarantee, no liability companies and unlimited liability companies. Most public companies are subject to more onerous disclosure and reporting requirements than proprietary companies. However certain public companies limited by guarantee are subject to a reduced disclosure and reporting regime. Public companies must have at least three directors, two of whom must ordinarily reside in Australia and at least one company secretary ordinarily resident in Australia. There is no limit as to the number of shareholders or members of a public company and, subject to compliance with the disclosure and other requirements set out in the Corporations Act, including the preparation of an offer document, may issue shares or debt instruments to the public.

6 6 Corporations A corporation is a separate legal entity created by charter or legislation. For the purposes of the Corporations Act a corporation includes a company (as described above), a body corporate and certain unincorporated bodies, but specifically excludes corporations sole and exempt public authorities. An unincorporated body may qualify as a corporation if it possesses certain corporate powers such as the power to hold property. Joint Ventures Two or more individuals or corporations may carry on business as a Joint Venture (JV). JVs are governed by common law and the law of contract. They may be incorporated (the JV is itself a separate legal entity) or unincorporated (the JV is not a separate legal entity). Unincorporated JVs are generally similar to a partnership (as described below), and should be governed by a carefully drafted JV agreement to set out the JV parties rights and obligations, and protect their interests. JVs are common in the property, mining and petroleum industries as well as not-for-profit associations. JVs are commonly formed for a single project rather than on-going business. Partnerships A partnership is an association of persons who carry on business together (in common) with a view to profit. A partnership is not a separate legal entity. Partnerships are regulated by state legislation, such as, in New South Wales, the Partnership Act 1892 (NSW). The number of partners permitted to form a partnership is generally limited to a maximum of 20, except for certain professional partnerships, such as legal and accounting partnerships, where this limit does not apply. An essential element of a partnership is the existence of a business, which includes a trade, occupation or profession. The business also must be carried on in common, which requires that the partners actually carrying on the business have authority to transact on behalf of the partnership, acting as agents for all the other partners, and the business must be carried on with a view to profit, which is a question of fact dependant on the circumstances of each case. In unlimited partnerships, partners are jointly and severally liable for all liabilities of the partnership, which means that any one partner can be pursued for recovery of all of the liabilities incurred by the partnership. In limited partnerships, there are two classes of partners: limited partners (LPs), who must not manage the business and whose liability is limited to a pre-contributed sum (similar to shareholders in a proprietary company) general partners (GPs), whose liability is unlimited and who undertake a managerial role in the activity of the business. A limited partnership must have at least one GP and at least one LP. Whilst a partnership is not a separate legal entity, certain state and territory legislation allows for the registration of an incorporated limited partnership, which is a separate legal entity. In limited partnerships the GP will, usually, be a lowly capitalised private company limited by shares holding little, if any, assets. The GP will manage the partnership business and incur any liabilities on its behalf, distributing profit earned to the LPs. Each state and territory has different requirements for the establishment of a limited partnership. The Australian Government also administers specific programs which may provide advantages (such as beneficial tax treatment) to certain limited partnerships, for example, venture capital and early stage venture capital limited partnerships. Trusts A business may be carried on through a trust. A trustee needs to be appointed which holds legal title to the assets of the business and carries on the trading activities with those assets on behalf of the beneficiaries of the trust or in pursuit of a lawful aim (such as a charity). The trustee may be an individual or a corporation, including foreign companies. A trust is not a separate legal entity but liability of the trustee and the beneficiaries may be limited. Usually the trustee of a trust is a separate legal entity such as a company set up specifically to carry out this role.

7 7 The trustee will manage the trust assets on behalf of the beneficiaries subject to the terms of any trust instrument the parties have in place and applicable state or territory legislation, such as, in Victoria, the Trustee Act 1958 (Vic). The trustee may incur liabilities on behalf of the trust, but the beneficiaries are not exposed to any liability other than dissipation of the trust fund they each have a beneficial interest in. A trustee owes a fiduciary duty of care to beneficiaries of the trust and has a number of other duties imposed on it by this relationship, including the duty to act in good faith, to avoid conflicts of interest, make full disclosure and not to make a secret profit or gain. Unit trusts are popular vehicles for the pooling of investments in Australia. Consideration needs to be given to the number of investors and the type and number of investments to be made in each case, to determine whether this is an appropriate structure. Where the number of investors is large (generally, exceeding 20), and the investors are not Sophisticated Investors (applies where the investment exceeds $500,000, or the investor has net assets of $2.5 million or gross income for the past 2 years of $250,000 or more), the trust may need to be registered as a Managed Investment Trust (MIT) and the trustee will require an appropriate Australian Financial Services License (AFSL). MITs can be listed on a stock exchange as, for example, many Real Estate Investment Trusts (REITs), which are a form of MIT, have done in recent years. Registered Foreign Companies A foreign company is an incorporated or unincorporated body formed outside Australia. A foreign company must register with ASIC to carry on business in Australia if, among other things, it has a place of business in Australia (such as a brand office), establishes or uses a share transfer or share registration office in Australia, or administers, manages or deals with property in Australia as an agent, legal personal representative or otherwise. An overseas company wishing to carry on business in Australia may elect either to register a subsidiary or establish a branch office by registering itself as a foreign company. If a branch office is to be established, the foreign company must be registered with ASIC and an Australian resident local agent must be appointed. Whether a foreign body is carrying on business in Australia, and therefore must establish a branch office or register a subsidiary, is a question of fact and will depend upon the application of the relevant legal principles to the circumstances of each case. The Corporations Act provides a list of factors that will not automatically lead to a foreign body being deemed to be carrying on business in Australia, which includes maintaining a bank account, being a party to legal proceedings, debt enforcement or soliciting an order that is only accepted outside of Australia.

8 8 Setting up in Australia Australian Companies The procedure for setting up a limited liability company, either a proprietary or public (not listed) company, is straight forward, with the relevant forms required to be lodged with ASIC (usually by an incorporation agent). Australian companies must have a registered office in Australia as well as director/s and a secretary that reside in Australia (a secretary is mandatory for a public company and usual, but not compulsory, for a proprietary company). Registered Foreign Company As mentioned above, companies incorporated outside Australia or incorporated bodies that do not have their principal place of business in Australia may carry on business through an Australian branch (by registering the foreign company through ASIC) or subsidiary (by registering a new company through ASIC). The procedure to register a foreign company is slightly more onerous than establishing a new company in Australia as a subsidiary, as the foreign company must lodge an application form with ASIC together with other documents (including its constituent documents). In addition, a foreign company establishing a branch must have a registered office in Australia and appoint a local agent (who may be a natural person or company in Australia) to represent the company. The agent is responsible for the company s compliance with the Corporations Act and is personally liable for any contravention of the Corporations Act. Once registered, a foreign company must lodge copies of its financial statements at least once in every calendar year and at intervals of not more than 15 months, comply with various notification obligations, is given the power to hold land under the Corporations Act and may sue and be sued under Australian law. Business Names A person may reserve a business name that is not identical to one already reserved or registered, not included in the National Business Names Register and not otherwise considered to be unacceptable. It is also prudent to conduct an IP Australia Trade Mark check to confirm if a proposed business name is the same or similar to a registered trademark. Unless a company s business name is the name of the individual operating the company, the company must register the business name through ASIC under the National Business Names Register. ACNs, ARBNs and ABNs ACN On registration, all companies are given a nine digit Australian Company Number (ACN) which must be quoted on all company publications, cheques, invoices and other official documents.

9 9 ARBN An Australian Registered Business Number (ARBN) is the equivalent of an ACN but is allocated to entities, other than Australian companies, when they are registered with ASIC. This includes foreign companies. ABN All companies which trade in Australia must register for an Australian Business Number (ABN) under the Australian tax system. The ABN is an 11 digit number (usually the ACN of a company with two further numbers added), maintained by the Australian Taxation Office (ATO) for tax purposes. The consequences for not having an ABN can be serious. For example, when a supplier fails to quote an ABN on their invoice, the purchaser is required to withhold 49% (being the top marginal rate of income tax plus the national healthcare (Medicare) levy and three year temporary budget repair levy ) of the amount payable to the supplier and remit that amount to the ATO. This amount will then only be credited back to the supplier on lodgement of their tax return (presuming the supplier not to be subject to the 49% rate of tax). Australian Securities Exchange (ASX) The ASX is the primary Australian Securities Exchange that has markets trading in equities, derivatives, futures and fixed interest securities. The ASX is the second largest securities exchange in the Asia-Pacific and operates under self-imposed rules (Listing Rules) aimed at protecting shareholder rights, ensuring major decisions are not taken without consulting members, as well as setting out the continuous disclosure obligations of the listed companies. Registered foreign companies listed on an approved foreign exchange may apply for an ASX foreign exempt listing if they satisfy a specific profits test or net tangible assets test set out in the Listing Rules. The profits test requires, among other matters, that the foreign entity has operating profit before income tax for each of the three years before listing of at least $200 million, while the net tangible assets test requires, among other matters, that the foreign entity have net tangible assets of at least $2 billion at the time of listing. These companies are not required to comply with ASX Listing Rules, but instead must continue to comply with the rules of the foreign exchange on which they are listed and must provide to the ASX a range of documents and reports on an on-going basis. If a company does not meet the foreign exempt listing requirements, it may apply for listing but will be required to establish an Australian securities register, appoint a local agent and comply fully with all applicable ASX Listing Rules.

10 10 Company Administration Directors and Secretaries A public company must have at least three directors and one secretary, and a proprietary company at least one director and need not have a secretary. In the case of a public company, at least two directors and at least one secretary are to be persons ordinarily resident in Australia and for a proprietary company at least one director and, if there is a secretary, and one secretary are to be persons who reside in Australia. Australian law imposes duties and obligations on company officers (commonly company directors and secretaries) in relation to honesty, reasonable care and diligence and proper use of information and position. Ignorance on the part of an officer will not affect the application of these duties and obligations; the role of an officer requires active participation in the company s affairs and positive steps by the officer to ensure he or she is adequately informed about the financial affairs of the company and, in particular, it is not allowed to trade when it is not able to pay its debts as they become due (i.e. the company is insolvent). Personal sanctions can be imposed on officers for breach of these duties, including a proceeding being taken against a director to recover compensation for loss resulting from insolvent trading, bans from holding a company office for a specified period or indefinitely, fines and, in extreme cases, imprisonment. It is also worth noting that these duties and obligations can apply to a person where, though not formally appointed to a role as an officer, the appointed directors are accustomed to act in accordance with such person s instructions. Such persons are known as shadow directors and can include parent overseas companies. Accounting A company is required to keep accounting records that correctly record and explain the transactions and the financial position of the company. Such accounting records are to enable the preparation of true and fair financial statements and (where required) an audit of such statements. In addition, companies are required to maintain various statutory registers. For reporting entities (which includes all public companies), large proprietary companies (proprietary companies which satisfies at least 2 of the 3 requirements (namely, 50 or more employees, consolidated assets of $12.5 million or more or consolidated operating revenue of $25 million or more)) and foreign controlled small proprietary companies, the financial statements are to be prepared in accordance with the provisions of the Corporations Act, Australian Accounting Standards and the interpretations issued by the Australian Accounting Standards Board from time to time.

11 11 AGMs For a public company, an AGM is to be held once in each calendar year and within five months of the end of the financial year. Accounts (comprising a statement of financial position, income statement, statement of changes in equity, statement of cash flows, director s statement, director s report and an auditor s report) are to be prepared before the AGM. A proprietary company does not need to hold an AGM each year, however a general meeting may be called by the directors or members of a proprietary company in accordance with the procedures set out in the company s Constitution or the Corporations Act. ASIC may also direct a company to call a general meeting. Financial Statements Companies required to lodge their financial statements with ASIC must do so within four months of the end of the financial year. Note that registered schemes or disclosing entities must do so within three months of the end of the financial year. The directors statement includes a statement that the financial statements comply with applicable accounting standards and the Corporations Act, give a true and fair view of the company s accounts and, in the directors opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Directors must have the financial literacy objectively expected of a person holding their position, and each director must have genuinely reviewed and independently formed the view that they approve of the financial statements before they sign-off on the directors statement. Audit All reporting entities, large proprietary companies and foreign controlled small proprietary companies must have their financial statements audited by a registered company auditor. The auditor must form an opinion as to whether the financial statements give a true and fair view and comply with the relevant sections of the law and applicable accounting standards. In addition, the directors statement is subject to audit. Annual Company Statement Each year a proprietary or public company must confirm key information regarding directors, shareholding and the business generally. This information is provided by ASIC on an Annual Company Statement which is sent to the registered address. Companies must also pay an annual review fee. If the Statement needs to be amended the company must submit a Form 484 to ASIC detailing the changes.

12 12 Workplace Relations Introduction In Australia, both federal and state laws govern nearly all aspects of the employment relationship, including the standard terms and conditions of employment, leave and holidays, tax and superannuation, discrimination and workplace health and safety. In general, the federal system of employment laws will apply to foreign companies who have a subsidiary which is registered in, or employs people in, Australia. Fair Work Act The principal law relating to employment is the Fair Work Act 2009 (FW Act). The FW Act covers all private sector employees in Australia, with a limited exception in Western Australia. Minimum Safety Net Conditions The National Employment Standards (NES) found in the FW Act provide the minimum standards (or safety net ) in respect of the terms and conditions of employment that apply to all employees covered by the federal legislation. There are 10 NES which are summarised below: 1. Maximum weekly hours: an employer must not require an employee to work more than 38 hours per week unless the additional hours are reasonable. 2. Requests for flexible working arrangements: employees have a right to request flexible working hours if they have carer responsibilities, or are elderly or have a disability, or are experiencing family violence, or need to care for a victim of family violence in the employee s family or household. An employer can only decline the request on reasonable business grounds. 3. Parental leave: new parents can each take a maximum of 12 months of unpaid parental leave. The federal government has a Paid Parental Leave Scheme which offers up to 18 weeks pay at the minimum wage to employees on parental leave with primary carer responsibilities plus up to two weeks pay at minimum wage for partners who are also taking parental leave but are not the primary caregiver. 4. Annual leave: employees are entitled to four weeks paid annual leave for each year of service. This is pro-rated for part-time employees. Shift workers are entitled to five weeks paid annual leave for each year of service. 5. Personal/carer s leave: employees are entitled to a total of 10 days paid personal (sick leave) and carer s leave for each year of service. Employees are also entitled to paid compassionate leave and unpaid carer s leave. 6. Community service leave: employees are entitled to unpaid leave to undertake community service activities such as jury service and emergency service duties. 7. Long service leave: long service leave continues to accrue in accordance with applicable state legislation. The federal government plans to implement a national long service leave system in the future to provide for nationally consistent long service leave entitlements. 8. Public holidays: an employee is entitled to be absent from work on prescribed public holidays. An employee who is absent from work on a public holiday will be entitled to payment at their base rate of pay for the ordinary hours that would have been worked. 9. Notice of termination and redundancy pay: an employer must not terminate an employee s employment unless they have given the employee the necessary period of written notice, or unless they have paid the employee an amount of salary in lieu of that notice period. Employees are entitled to redundancy pay where their employment is terminated because the employer no longer requires their job to be done by anyone. The amount of redundancy pay is prescribed in the NES. 10. Fair Work Information Statement: employers are required to give new employees the Fair Work Information Statement as soon as practicable after they start work. The Statement is published by Fair Work Australia and contains general information about the terms and conditions of employment under the FW Act.

13 13 Awards Awards are statutory instruments which contain the minimum terms and conditions that apply to most employees working in the particular industries to which they apply. The terms and conditions contained in awards are supplementary to those contained in the NES and employers need to ensure they are familiar with any awards that may apply to their employees. Enterprise Agreements Enterprise Agreements are agreements that contain the terms and conditions of a group of employees, usually employed by the same employer. Enterprise Agreements are negotiated between the employer and its employees, either directly or through bargaining representatives such as an employee union. Individual Employment Contracts An employer and an individual employee may also enter into an individual employment contract. Contracted conditions are subject to the minimum employment standards provided under the NES, awards and enterprise agreements. Individual contracts will usually address additional terms and conditions to those contained in the NES plus applicable awards or enterprise agreements. The terms and conditions that may be addressed include bonuses, salary sacrificing arrangements and restraints relating to after the employment period. Potential Employment Claims Unfair dismissal: the FW Act provides a mechanism for certain employees to challenge the termination of their employment by claiming there has been an unfair dismissal on the basis that the termination was harsh, unjust or unreasonable in the circumstances. If an employee is successful in bringing an unfair dismissal claim, they can be reinstated with full back pay or may receive up to six months remuneration as compensation. General protections: an employee may bring an action under the general protection provision of the FW Act if the employer takes adverse action against the employee because they have a workplace right, have exercised a workplace right or propose to exercise a workplace right. Adverse action claims can also be commenced by prospective employees and independent contractors and are not limited to termination of employment or contract situations. Discrimination: in addition to a general protections claim under the FW Act, an employee may also bring a discrimination claim against their employer or former employer under federal or state anti-discrimination legislation. Such a claim will be successful if the employee has been treated less favourably than others because of, for instance, their age, race, religion, sex, sexual preference or the existence or perceived existence of a disability. Other possible claims: claims can also exist for breach of the employment contract or misleading and deceptive conduct in relation to the employment under the Federal Competition and Consumer Law Act.

14 14 Workplace Health and Safety Australia has a comprehensive workplace health and safety regime, which operates at the state level and requires employers to ensure the health, safety and wellbeing of their employees and other people who attend the employer s workplace. Health and safety inspectors are given power to inspect any workplace to ensure that the employer is complying with their workplace health and safety obligations. Breaches of workplace health and safety obligations expose employers, including directors and managerial staff, to prosecution. Fines of up to $1.6 million and imprisonment can be imposed. Superannuation In accordance with the compulsory superannuation guarantee scheme that operates in Australia, an employer must make superannuation contributions for their employees. Under the Superannuation Guarantee Charge Act 1992 (Cth), all employers are required to make compulsory superannuation contributions (currently 9.5% of an employee s ordinary time earnings, up to a maximum contribution base) to a complying superannuation fund. If an employer fails to make, or makes insufficient, contributions for an employee, the employer will incur a superannuation guarantee charge liability. Discrimination In addition to the prohibition against discrimination under the general protections provisions in the FW Act, there is antidiscrimination legislation at both the federal and state level that prohibits discrimination on prescribed grounds in relation to, for instance, recruitment, the terms and conditions of employment, dismissal of an employee and access to promotion and training opportunities. The grounds upon which a person may bring a discrimination claim are broad. As well as the more commonly litigated grounds of disability, age, sex and race, claims can also be brought for discrimination on the basis of national extraction, political opinion, gender identity, criminal records and medical records.

15 15 Fundraising The Corporations Act regulates all securities fundraising activity within Australia, whether by an Australian or foreign issuer. Unless specific exceptions apply (as set out in the Corporations Act), a person is prohibited from offering securities to an Australian resident unless it first lodges with ASIC a disclosure statement which contains all the information that investors and their professional advisers would reasonably require to make an informed assessment of the offer. Disclosure can take various forms, whether it be a prospectus, short-form prospectus, profile statement or offer information statement. The Corporations Act also requires certain ongoing disclosure in relation to securities. It aims to help investors assess the risks and rewards associated with the securities offered and make informed choices as to any acquisition. There are various exceptions to the disclosure regime. These apply principally in respect of offers made to sophisticated (or high net worth) investors, where the minimum investment amount is in excess of a prescribed threshold, and also where the offer is a personal offer that is made to a limited number of investors who invest below a certain threshold. If an offer is made without disclosure, pursuant to an exception, there may be ancillary restrictions on any advertisement of the offer. Other exceptions also apply in the context of rights issues to existing shareholders for listed entities that are subject to the continuous disclosure rules. In general, Australia is seen as having an issuerfriendly regime which allows fundraising to be conducted quickly and (in the case of secondary offerings) often without a formal prospectus. ASIC recently granted further disclosure relief in respect of certain non-traditional rights issues, including accelerated issues and shortfall offers.

16 16 Foreign Investment The Australian Government s foreign investment policy is implemented through Commonwealth legislation, namely the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA). Under the FATA, the Foreign Investment Review Board (FIRB) assesses proposals and provides advice to the Federal Treasurer who is responsible for administering the regulations and approving foreign investments that fall within the jurisdiction of the FATA. The FATA applies to investment proposals by foreign interests. A foreign interest for the purposes of FATA includes a natural person not ordinarily resident in Australia and a corporation in which either a natural person not ordinarily resident in Australia, or a foreign corporation, has a controlling (substantial) interest. A substantial foreign interest in an Australian corporation, business or trust is recognised as a holding of 20% or more by a single foreign interest and any associates, or holdings of 40% or more in aggregate by two or more foreign interests and any of their associates (whether or not connected to each other). In accordance with FATA, substantial interests are traced so that if such an interest is held in another corporation or trust, then that second corporation or trust is also deemed to be a foreign interest. Section 6 of FATA also sets out other relationships which will be regarded as being associated. The Australian Taxation Office (ATO) administers the compliance and enforcement of foreign investment rules with regards to residential land. The ATO also records all foreign persons who holds agricultural land on the Agricultural Land Register. An investment by a foreign investor in residential land must be notified to the ATO. As for other investments, whether an investment by a foreign interest must be notified to FIRB depends on: the nationality of the investor the industry sector in which the investment is to be made the value of the investment. A fee is also payable for notifying the relevant government authority. Examples of these thresholds as at September 2016 are as follows: acquisition of a substantial interest of an existing Australian entity that is valued at A$252 million. For non-government US, Chilean, Japanese, Korean, New Zealand and Chinese investors (and Trans-Pacific partnership countries when the Trans-Pacific Partnership Agreement comes into force), the value threshold is A$1,094 million or A$252 million for making an investment in a prescribed sensitive sector, which includes: -- media -- telecommunications -- transport -- military or defence force goods, equipment or technology -- encryption and security technologies and communications systems -- uranium, plutonium or nuclear facilities. takeovers of offshore companies whose Australian subsidiaries or gross assets are valued at more than A$252 million all direct investments by foreign governments or their agencies, irrespective of size (which includes all state-owned enterprises or SOEs) acquisitions of interests in land (including interests that arise via leases, financing and profit sharing arrangements and the acquisition of interests in land corporations and trusts) that involve acquisition of: -- developed commercial land where the property is valued at A$1,094 million for US, Chilean, Japanese, Korean, New Zealand and Chinese investors or A$252 million for other investors (which is further reduced to A$55 million if the property is a low threshold land or sensitive land including mines and critical infrastructure, airport or port) -- vacant commercial land, irrespective of value

17 17 -- residential land, irrespective of value -- shares or units in Australian land corporation or land trust where more than 10% of the value of its total assets comprise residential land or vacant commercial land, irrespective of value -- shares or units in Australian land corporation or land trust where less than 10% of the value of its total assets comprise residential land or vacant commercial land, as per above for developed commercial land (subject to exemptions for passive investments in listed and unlisted trusts) acquisitions of Australian agricultural land valued at more than A$1,094 million for US, Chilean and New Zealand investors, $50 million for Singaporean and Thai investors and A$15 million for all other foreign investors. For the purposes of administering Australian foreign investment policy, funding arrangements that include debt instruments having quasi-equity characteristics may be treated as direct foreign investment. Foreign investment applications should be submitted through an online system. Applications that relate to foreign investment in commercial land, agricultural land or an Australian business will be processed by FIRB whilst applications that relate to residential land will be processed by the ATO. A fee is payable at the time of application for all foreign investment applications. A 30 day examination period applies to applications once they are formally lodged and the correct fee has been paid in full. However for more complex proposals, the examination period can be extended for up to 90 days. Generally, approval is granted unless the proposal is judged to be contrary to the national interest. An approval is valid for 12 months from the date it is granted.

18 18 Tax Australia imposes taxation on the worldwide income of persons and entities resident in Australia for tax purposes and the income of non-residents sourced in Australia (subject to any relevant double taxation agreement). Different forms of direct and indirect taxes are levied by both the federal and state governments, such as: Federal Government Income Tax and Capital Gains Tax Broadly, Australia levies tax on three sources of income for individual taxpayers: personal earnings (for example, salary and wages), business income and capital gains. Income received by individuals is taxed at progressive rates. Income derived by companies is taxed at a flat rate of 30% unless the company has an aggregate annual turnover of less than $2 million in which case it is a small business entity with a flat tax rate of 28.5%. Non-residents are normally taxed on Australian income derived from Australian sources only. Most businesses are required to pay quarterly (Pay as you go or PAYG) instalments throughout the year based on their estimated tax liability. Generally, capital gains are taxed at the income tax rate applied to the person making the gain. A capital gain is only subject to tax when the gain is realised. For non resident individuals and trusts, a discount of 50% may apply to the gain accrued up to 8 May 2012, provided that the individual or trust obtains a valuation of the taxable property as at that date. No discount applies to any gains accrued after this date. Fringe Benefits Tax (FBT) FBT is applied to most, although not all, fringe benefits (which are generally non-cash benefits provided by an employer to its employees). Most fringe benefits are also reported on employee payment summaries for inclusion on personal income tax returns that must be lodged annually. Goods and Services Tax (GST) The GST is a value added tax of 10% on most goods and services transactions in Australia and is intended to be paid by the ultimate Australian consumer. Indirect Taxes Indirect taxes are levied on goods such as petrol, oil, alcohol and tobacco. Superannuation Tax Tax is levied on payments made to superannuation (pension) schemes. Concessional contributions (being contributions by employers, salary sacrifice contributions and contributions by self employed persons) to superannuation funds incur a tax of 15% when paid. There is a cap on how much can be contributed in concessional contributions and, if the cap is exceeded, the member incurs excess tax. If the combined income and superannuation contributions are more than $300,000 a year, a further 15% tax is payable on the amounts above the $300,000 threshold. Withholding Tax Foreign investors in Australian real estate can enjoy a concessional tax rate of 15% rather than 30% through the Managed Investment Trust Withholding Tax Regime if the foreign investor resides in a jurisdiction with which Australia has an effective Exchange of Information agreement. This includes China, United Kingdom, United States of America, New Zealand, Indonesia, Singapore and Malaysia. In addition, a concessionary rate of 10% applies if the fund payment was made by a Managed Investment Trust that holds only energy efficient commercial buildings constructed on or after 1 July State Government The individual state governments each levy taxes such as employee payroll tax, gambling taxes, motor vehicle taxes, land tax and/or stamp duty. Please note that the Australian tax system is complex and cannot be summarised without omitting other relevant taxes or the details required to analyse its impact. It is strongly recommended that tailored tax advice be sought before any steps are taken.

19 19 Protection of Technology & Intellectual Property The principal forms of intellectual property protection available in Australia are copyright, patents, designs and trade marks. All of these forms of protection are governed by legislation. The common law also provides remedies against a person passing off goods or services as those of another, as well as protection for confidential information and trade secrets. Australia is a member of the World Intellectual Property Organization (WIPO). Copyright Copyright protects all original literary, dramatic, musical and artistic works as well as sound recordings, films and broadcasts first published in Australia, or by an Australian. Copyright is regulated by the Copyright Act 1968 (Cth) (Copyright Act). There is no registration process required to obtain protection as copyright which satisfies the requirements under the Copyright Act will subsist automatically. Literary, dramatic, musical or artistic works are protected under the Copyright Act for the duration of the life of the author plus 70 years. Infringement occurs when a person does, or authorises the doing of, any of the acts described as exclusive rights. An infringing party can be subject to an injunction, restraining them from doing a particular act, or ordered to pay compensation to the injured party. Patents Registered patents in Australia are protected under the Patents Act 1990 (Cth). A patent is a temporary monopoly granted to a patentee over a device, substance, method or process which is deemed new and inventive. There are two types of patents in Australia: a standard patent: holders of a standard patent have the exclusive right to exploit the patent for a period of 20 years an innovation patent: a relatively fast, inexpensive protection option, which grants the holder the exclusive right to exploit the patent for a period of eight years. Artistic creations, mathematical models, plans, schemes or other purely mental processes cannot be patented. Patents are administered by IP Australia. Designs Designs are regulated by the Designs Act 2003 (Cth) and relate to the shape, configuration, pattern or ornamentation which, when applied to a product, gives the product a unique and distinctive appearance. Registration protects the design for five years, however it is possible to renew the registration for an additional five years. A registered owner has: the exclusive right to use the design the exclusive right to authorise others to use the design the exclusive right to prevent others from using the design. Protection is only for the appearance of the product and not how it works. Designs are administered by IP Australia. Trade Marks A trade mark can be a word, phrase, letter, number, sound, smell, shape, logo, picture, aspect of packaging or a combination and is used to distinguish goods and services. Registration of a trade mark is not compulsory, as there is some protection against misrepresentation under the common law and consumer protection legislation. A registered trade mark gives the owner the legal right to use, license or sell within Australia the goods and services for which the trade mark is registered and protected under the Trade Marks Act 1995 (Cth). Registered trade marks can be enforced against competitors who use identical, substantially identical or deceptively similar trade marks for the same goods and services, or similar goods or services if there is a likelihood of deception or confusion arising. Australia joined the Madrid Protocol (Protocol) relating to international registration of trade marks in The Protocol provides Australians with an easy to use and cost effective mechanism to protect trade marks overseas and presents several advantages to applicants seeking protection in any of the contracting states. The Protocol requires a single application only, in one language (English, Spanish or French), filed through the Trade Marks Office of the country of origin and offers protection in any of the Protocol member countries. Trade marks are administered by IP Australia.

20 20 Domain Names The.com.au second level domain (2LD) is the most commonly used to denote a business with an Australian connection. Au Domain Administration Ltd (auda) is the policy authority and industry self-regulatory body for the.au domain space. In addition to the.au domains, there are closed domains available only to the educational and government sectors and community geographic domains reserved for community groups in Australian locations. The.com.au domain is for commercial purposes. Under the auda policy, to be eligible for a domain name in the.com.au 2LD, registrants must be: an Australian registered company trading under a registered business name in any Australian state or territory; or an Australian partnership or sole trader a foreign company licensed to trade in Australia an owner of an Australian Registered Trade Mark an applicant for an Australian Registered Trade Mark an association incorporated in any Australian state or territory an Australian commercial statutory body. Domain names in the.com.au 2LD must also be: an exact match, abbreviation or acronym of the registrant s name or trade mark otherwise closely and substantially connected to the registrant. auda administers and investigates complaints regarding domain name registrations including complaints that the registrant does not meet the eligibility requirements or where a.au domain is offered for sale. IP Australia IP Australia administers Australia s intellectual property rights system, specifically patents, trade marks, designs and plant breeder s rights.

21 21 Anti-Trust and Consumer law Anti-Trust & Competition Regulation The Competition and Consumer Act 2010 (Cth) (ACCA), previously known as the Trade Practices Act 1974 (Cth), is one of the most litigated pieces of legislation in Australia and is regulated by the Australian Competition and Consumer Commission (ACCC) which has the aim of ensuring that the ACCA s competition, fair trading and consumer protection laws are complied with. With respect to competition or anti-trust issues, the ACCA prohibits a range of anti-competitive behaviour including: cartel (collusive) conduct boycotts price fixing resale price maintenance exclusive dealing abuse of market power other arrangements (including mergers, takeovers and acquisitions) that have the purpose or effect of substantially lessening competition in a market for goods and services in Australia. Contraventions of the ACCA can lead to fines of up to $10 million for companies and $500,000 for individuals per breach, as well as injunctions, divestiture orders, and damages under civil action. In particular, cartel conduct (arrangements between two competitors fixing prices, restricting their supplies or fixing a bid) is a very serious offence, with those who are found to be in breach at risk of facing criminal prosecution and penalties including imprisonment (and substantial financial penalties). However, some of the conduct above may be approved, on application, by the ACCC on the grounds of public benefit. Consumer Protection The ACCA imposes controls on the composition, design and labelling of consumer products, by means of a schedule to the ACCA known as the Australian Consumer Law (ACL). Similar state provisions apply to individuals. They also detail minimum safety and information requirements to enable consumers to make informed purchases. Authorities conduct random inspections to determine compliance. Investigations may also be initiated by a consumer or competitor complaint. Failure to comply can result in penalties, and non-compliant goods may be refused entry into Australia. Consumers can also take private legal action. Misleading or Deceptive Conduct and Unconscionable Conduct Section 18 of the ACL (former Section 52 of the TPA) prohibits a corporation from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. There is a corresponding prohibition in State Fair Trading legislation that applies to sole business operations and other types of business structures. Intention to mislead or deceive is not required The common law, under the tort of passing off, also protects the goodwill and reputation of a business from wrongful appropriation and is directed at preventing competitors from damaging or wrongfully attempting to take advantage of that goodwill and reputation. Country of origin labelling A product which has labelling which incorrectly states that it has been made in a particular place or country may give rise to liability for misleading and deceptive conduct. A country of origin representation is any labelling, packaging, logo or advertising that makes a statement, claim or implication about which country goods come from, such as Made in Japan or Product of France. Australian Standards Whilst often voluntary and not binding, unless adopted by legislation, Australian Standards impose requirements on certain goods to comply with specific performance characteristics, composition, methods of manufacture or process, construction, packaging rules, or they may dictate the type of information required to be distributed to consumers. Failure to comply with a standard adopted by legislation is an offence. However failure to observe a voluntary or mandatory standard may be evidence of negligence, indicating that the product is defective or not fit for its purpose.

22 22 Hazardous and unsafe goods Products containing ingredients which are deemed to have the potential to harm people or the environment are subject to regulatory control. Mandatory safety standards are declared for products that are likely to be especially hazardous. The ACCC enforces mandatory product safety and bans of unsafe goods. Trade measurement Importation of various items is regulated in Australia, where the Minister has power to declare certain goods to be unsafe or to apply certain regulations to them. Further, state legislation imposes particular labelling specifications for packaged foods. Advertising claims Certain types of false, misleading or deceptive claims regarding products (including in an advertisement) are specifically prohibited by the ACL. Businesses, in their advertisements, must not make false claims as to the quality, style, model or history of goods or services, whether the goods are new, performance characteristics, benefits and uses of goods and services, availability of repair facilities or spare parts, place of origin of the goods, buyer s need for the goods or services and any exclusions on the goods or services. Representations as to price are regulated by the ACCA and the ACCC. A business may be held to be in breach of the ACCA where it: makes false or misleading price comparisons falsely represents an advertised price as the total price of the goods or services advertises goods or services at a specific price when it knows, or should have known that there are insufficient goods or services available for a reasonable period of time. The Advertising Standards Bureau (ASB) administers a national system of advertising selfregulation through the ASB and the Advertising Claims Board. The ASB determines complaints regarding the use of language, discriminatory portrayal of people, violence, sex, nudity, health and safety, children s welfare and marketing food and beverages to children. Statutory warranties Statutory warranties apply to certain goods and services as set out in the ACL and State Fair Trading laws. These implied warranties cannot be contracted out of, or refused, changed or limited by a retailer or supplier. Warranties include: undisputed ownership of goods services carried out with due care and skill goods and services being fit for their purpose and of merchantable quality. Retailers and suppliers may also offer additional express warranties such as: money-back guarantee store refund policy store exchange policy exclusions of liability for statutory warranties. Liability for breach of statutory warranties cannot be excluded and may only be limited to the extent permitted under the ACL. Provisions purporting to exclude statutory warranties may constitute misleading and deceptive conduct under the ACL which can attract both civil and criminal penalties. Product Liability Aside from negligence, breach of contract or warranty, the ACCA provides another means of recourse when a defective product causes injury or property damage and allows the affected person to claim compensation from the manufacturer or importer. Under the ACCA, goods are defective if they do not have the degree of safety that a consumer is generally entitled to expect. Losses that are recoverable (for a period of up to 3 years from the date of the loss or of becoming aware of the identity of the manufacturer) include: when a product causes injury or death to a person; consequent loss suffered by a related person; and for damage to goods or land. A manufacturer can, however, defend liability if it can be shown that the defect occurred after the supply of the product, was caused by mandatory standards or was not discovered due to the state of scientific or technical knowledge at the time of manufacture. Further defences exist if the product was a component part in a finished good.

23 23 Contract Law A contract is a legally enforceable agreement or promise. A contract will only be enforceable where it satisfies the relevant requirements including offer, acceptance, consideration, intention to create legal relations and certainty. While contract law is generally regulated by the common law there is also legislation to remedy unfair and unconscionable conduct. A contract will not be enforceable where it contravenes legislation or public policy. Generally only the parties to a contract are bound by it and are entitled to enforce it. The regime provides that any term of a standard form contract which is unfair may be determined to be void and treated as if it never existed. The remedies which might be sought by a regulator or the affected party include injunctions, declarations, and other orders a court thinks appropriate (including orders to refund money). Unfair Contracts Law Certain unfair terms in consumer and small business contracts may be declared void. The regime applies to standard form consumer contracts by consumers and certain small businesses, and to contracts which are financial products or are for the supply (or possible supply) of financial services.

24 24 Public Takeovers The Corporations Act regulates takeovers of voting shares and other securities of listed entities and unlisted Australian companies with more than 50 members. In doing so it seeks to ensure that such actions occur in a competitive and informed market, and in accordance with proper process, allowing targets reasonable opportunity to assess and participate in any takeover offers received. Subject to certain exceptions, a person is prohibited from acquiring a relevant interest in more than 20% of the issued voting shares of such companies, or acquiring further shares from a starting point that is above 20% and below 90%. The exceptions include making an on-market or off-market takeover bid (with offmarket bids being the most common as they can be conditional unlike market bids which need to be unconditional), a court approved scheme of arrangement, rights issues (although these are closely monitored by ASIC), selective reductions of capital, exercise of a security interest and creep acquisitions (being acquisitions of 3% or less over a 6 month period). The concept of a relevant interest is extremely broad and covers direct and indirect interests, such that a person may reach the relevant threshold without becoming a registered holder of shares. If a person acquires a minimum of a 90% relevant interest in the voting shares of a company under a takeover offer, there are compulsory acquisition procedures which may be used in order to acquire the balance of the shares if certain criteria are met. These total acquisition provisions offer substantial benefits to the successful bidder, including tax offset opportunities and the removal of potential conflict of interest constraints. The regulatory bodies involved in a takeover will be: ASIC, which regulates compliance with the Corporations Act ASX, which regulates the conduct of entities listed on the ASX and compliance with the Listing Rules, and the Takeovers Panel, which is responsible for reviewing conduct during a takeover, both in terms of strict compliance with the applicable legislation and also whether conduct constitutes unacceptable circumstances (the takeovers panel is the body which has the power to make a broad range of orders to remedy any breaches). Certain takeovers may also require foreign investment approval or competition clearances (where overseas bidders are involved or the acquisition could impact competition in the market) at which point the Foreign Investment Review Board or ACCC may also become involved. As an alternative to structuring an acquisition by way of a takeover, the Corporations Act also permits similar transactions to be effected by way of a scheme of arrangement. Schemes of arrangement allow for greater flexibility and also enables a bidder to have certainty that, if the scheme is approved, the bidder will acquire a 100% interest in the target. However, schemes of arrangement require shareholder approval (including, approval by at least 75% of all shareholders in the target who are not connected to the bidder) and court approval. As such, schemes of arrangement can only be implemented in friendly transactions, unlike takeover bid which can be either friendly or hostile.

25 Doing Business in Australia 25 Electronic Commerce Data Protection and Electronic Commerce Electronic commerce, or e-commerce, refers to all commercial transactions which are based on the electronic processing and transmission of data, including text, sound and images, including Internet transactions, electronic funds transfers and electronic data exchange. Electronic Transactions Acts enacted by the Commonwealth, states and territories were passed to facilitate electronic transactions and to ensure the validity of the transactions involving electronic methods. Electronic Contract Law An electronic contract, or e-contract, is an agreement that is created and signed by electronic means either through or by clicking through a website to indicate acceptance of terms and conditions. The formation and validity of e-contracts in Australia is still predominantly governed by common law principles of contract. Data Protection and Privacy The Privacy Act (1988) contains Australian Privacy Principles which reflect each stage of the information cycle and regulate how information should be collected, stored, disseminated and destroyed. Spam Spam is unsolicited commercial electronic messaging and is prohibited under the Spam Act 2003 (Cth) (Spam Act). The objective of the legislation is to safeguard legitimate business communication activities and encourage the responsible use of electronic messaging. The Spam Act covers commercial electronic messages that are sent via , Short Message Service (SMS), Multimedia Message Service (MMS) and Instant Messaging (IM) and originate in Australia, or originate overseas and are sent to an address accessed in Australia. Businesses must have the consent of the recipient before the message is sent. Consent can be express or inferred from a business, or other relationship with the recipient, or their conduct. All commercial electronic messages must contain accurate information about the person or business responsible for sending the message and a functional unsubscribe function for the message s recipients to indicate that they do not wish to receive such messages in the future.

26 26 Business Migration and Employer Sponsored Visas Australia s Migration Program Australia s Federal Department of Immigration and Border Protection administers temporary and permanent entry into Australia. Australia s Migration Program is a vital part of the federal government s economic policy and focuses on temporary and permanent entry into Australia through: employer sponsored visas by Australian or overseas businesses business skills visas under the Business Innovation and Investment Program general skilled migration visas. Business Innovation and Investment Program Business owners and entrepreneurs looking to invest in or set up business operations in Australia may be eligible to apply for business skills visas namely: Business Talent (Permanent) visa (Subclass 132) Business Innovation and Investment (Provisional) visa (Subclass 188) Business Innovation and Investment (Permanent) visa (Subclass 888). Holding Redlich s National Immigration Law group provides full service advice on all aspects of provisional and permanent visas including under the Business Innovation and Investment Program. This includes expert and practical advice and assistance with state sponsorship approval, the expression of interest, the application and the extensive supporting documentation which must be lodged with an application. Temporary Business Visas We assist business people to obtain visas to visit Australia for business purposes including, to attend a conference or training session, to conduct business meetings and business negotiations or for an exploratory business visit. Employer Sponsored Temporary and Permanent Visas Holding Redlich acts for Australian and international corporations seeking to sponsor overseas workers for temporary and permanent residency visas including personnel at executive, managerial, professional, technical and trade levels. We get to know your business and your challenges and provide you with immigration law and related services including: Australian and overseas Temporary Work (Skilled) visa (Subclass 457) sponsorship arrangements Subclass 457 business sponsorship obligations and employment related matters, and preparation for the new TSS subclass in March 2018 preparation, lodgement and approval of sponsorship, nomination and visa applications under the Subclass 457 Visa Program, and for the new TSS subclass from March 2018 Employer Nomination Scheme and Regional Sponsorship Migration Scheme visas so as to obtain permanent residency into Australia. We represent individuals, and domestic and multinational corporations across a wide range of industry sectors. These include: mining construction biomedical retail engineering tourism health recruitment information technology education agriculture aviation consumer products hospitality manufacturing and others. Holding Redlich s National Immigration Law group are expert legal practitioners who have a proven track record for excellence in providing specialised immigration legal advice and related services, and achieving outstanding results.

27 27 Real Property When buying or selling land in Australia, there are a number of important matters that need to be taken into consideration. As a buyer, it is crucial to carry out a thorough investigation of issues such as the title to the land, the condition of any structures on the land, the use to which the land can be put in accordance with local planning laws, whether Federal Government approval is required for the purchase and the taxation consequences of the acquisition. This is commonly referred to as conducting due diligence investigations. As a seller, there may be statutory obligations which must be met, such as providing a potential buyer with a statutory disclosure documentation. Torrens Title Land In terms of title, most land in Australia operates under a system of land registration known as the Torrens system. If a party wishes to buy or sell Torrens title land in Australia, it must do so by registering its interest in the land on the relevant Torrens register. The register confers on the registered proprietor an indefeasible title to that interest. Two other systems of land that exist in Australia are State leases and the common law deeds system, also known as Old system title. Old system title is now quite uncommon. State leases are used for all land in the Australian Capital Territory and are otherwise used for land of special significance, such as Barrier Reef Islands, and land for which the relevant Government wishes to exercise a higher degree of control over the land use. State leases are more common for agricultural land. Contract between Buyer and Seller Land in Australia is usually bought and sold under a written contract. In most States there are one of more forms of standard contract that are commonly used, though any commercial transaction will likely have various special conditions to deal with matters not covered in the standard terms. Additional terms may be implied into a contract under a law. It is important for buyers and sellers to know when implied terms may be included in a contract and the consequences of failing to comply with them. You should not sign any contract or document before consulting a lawyer and obtaining expert advice. Once signed you may be legally bound and unable to reconsider. The usual conveyancing period between the time the parties enter into a contract and the date of completion of the contract (also known as settlement ) is days. On completion, the title is transferred to the buyer in return for payment of the purchase price, which is adjusted for outgoings which concern the land (such as council rates and land tax) and any income from the land.

28 28 Duties and Taxes When buying or selling land, it is also important to consider the taxation consequences. In particular, liability to pay state government stamp duty and land taxes, federal government Goods and Services Tax (GST) and Capital Gains Tax (CGT) should be considered. State Governments charge stamp duty on the purchase of land calculated as a proportion of the dutiable value of the land, usually being the purchase price. Land tax is charged at a much lower rate than stamp duty, but is payable annually by the owner of the land, unless the owner is exempt under the relevant statute. The type of entity (eg: individual, company, trustee) that purchases the land may affect the entity s subsequent land tax liability. Generally, a seller of land will be liable to pay GST on the sale of land at a rate of 1/11th of the purchase price, unless an exemption applies (eg: the sale of certain existing residential dwellings). For a commercial property sale, any applicable GST is usually added to the purchase price and is therefore part of the dutiable value. In that case the buyer may be entitled to a refund of the GST from the Government (called an input tax credit). Some commercial properties are sold as a going concern and then GST does not apply. The way GST may apply to a commercial property transaction can be very complicated and expert advice should always be sought. Structuring Before buying any land in Australia it is very important that you obtain expert advice as to how to structure the purchase. You need to obtain advice as to whether you should buy it in your name, a company, trust or other entity. A failure to structure the purchase correctly can create adverse taxation and other consequences in the future. Leasing As an alternative to buying land, it may be preferable to enter into a lease of land. A lease confers a right of exclusive possession of the land for a fixed period of time. As with buying land, dealings with leases are usually registered on the relevant Torrens register but this varies from state to state. In Australia the lease of a shop or other premises located in a retail shopping centre will be regulated by tenant friendly retail leasing legislation. This legislation contains mandatory provisions with which the lease or the land owner must comply, including provisions relating to disclosure, fit-out, disturbance, relocation, advertising and promotion and assignment. Commercial (non-retail) leases are not governed by retail leasing legislation but will be subject to other statutes, such as the Real Property Act 1900 and Conveyancing Act 1919 in New South Wales. Consent for Use or Development Whether buying or leasing land in Australia, it is important to consult the relevant planning and other authorities, statutes and instruments to ensure that the proposed use or development of the land is permissible and, if so, determine whether any further consents from the relevant planning or other authorities must be obtained before that use or development may occur. Agents If you want to buy land it is likely that you will need to deal with an Agent. The selling agent is the vendor s agent, not yours or the buyer s agent. Therefore the Agent is legally obliged to look after the vendor s interests, not the buyer s. Foreign Investment Review Board (FIRB) The purchase of an interest in certain types of real estate by a Foreign Interest generally requires federal government approval following examination and recommendations made by the FIRB. An interest includes buying land but can also include entry into a lease, financing or profit sharing arrangements. This is another reason why a contract should not be signed until you have consulted a lawyer.

29 29 Environmental Law Industry and development in Australia is controlled by a framework of environment and planning legislation. These laws undergo regular change as the law attempts to respond to the changing natural and business environments. When planning to carry out business activities or development in Australia, environment and land use controls should be considered up front, as the cost and time required to achieve compliance can significantly impact the delivery and ultimately the viability of a project. Federal Laws The federal environmental laws are implemented to give effect to international treaties or other areas where the federal parliament has power to make laws. Federal involvement may occur where development is carried out on land owned by the federal government or where the development might impact on a matter of national environmental significance. The Environment Protection and Biodiversity Conservation Act 1999 (Cth) is the key piece of federal legislation that seeks to ensure environmental protection and natural resource management. Other federal legislation may apply such as maritime laws or laws that regulate the export of certain hazardous wastes. State and Territory Laws Planning Laws Land use approvals may be required under planning legislation in the states and territories. This legislation controls what type of development requires approval and from which public authority the approval must be obtained. Whether planning approval will be granted depends on the nature of the business proposed, the land zoning and the potential environmental impacts of the business. The assessment process for planning approvals varies between the states and territories and almost always involves public participation. The public generally have a right to make submissions on development proposals and in some cases, objections to development proposals and may have rights to appeal a public authority s determination to the courts or tribunals. During the environmental assessment process, the public authority that determines the application may conduct inquiries or public hearings. Planning approvals can be given by local government authorities, state government authorities or independent panels. Most development approvals will be given subject to conditions that regulate how the development is carried out and seeks to manage its impacts. Approval conditions can require development contributions, which may include financial contributions, the dedication of land or provision of environmental offsets. Approvals may also require environmental management plans to be drafted and implemented for the life of the development.

30 30 Environmental Laws Generally, environmental laws seek to regulate and manage the impact of development and industry on the environment. In addition to planning approval, some development will require approvals or licences from public authorities that regulate environmental matters including pollution, waste and biodiversity. Environmental approvals generally seek to assess and manage environmental impacts. Where appropriate, an environmental approval will be subject to conditions that allow the activity to operate in a way that manages its environmental impacts within acceptable limits. For example, limits may be placed on the discharge of waste water or the level of noise that can be emitted from premises. Most states and territories have a specialist statutory authority with responsibility to protect the environment. That authority will decide applications for environmental approvals and is also empowered to undertake investigations into alleged environmental offences or pollution incidents. Enforcement action that may include fines and in some cases prosecution may be taken by the responsible authority. Other legislation may regulate the impact of development on threatened species or habitat, heritage, water management, waste, hazardous or dangerous goods or the marine environment. Approvals or permits may be required under this legislation in addition to approvals that may be required under planning or other environmental legislation. State and territory legislation may also regulate contaminated land. Regulation sometimes places the responsibility to remediate contaminate land on the person who caused the contamination. In some cases, another person such as the landowner will be responsible to remediate the land. Understanding whether land is contaminated and to what level will be important given the financial obligations that may be incurred in any remediation activities. Due Diligence Early planning and environmental due diligence will assist decision makers who may be acquiring land or setting up a business in Australia. A due diligence report will arm decision makers with information on the state of the land, the likely approvals that may be required to establish a business or what approvals presently apply to the business being purchased. Identifying existing approvals or approvals that may be required to lawfully establish the business helps to assess the risks and responsibilities of carrying on the business. A due diligence report will also assist in understanding the cost and timing of the approval processes before entering any development or other agreements for the project.

31 31 Climate Change National Greenhouse and Energy Reporting Scheme The National Greenhouse and Energy Reporting Scheme (NGERS) is the national framework for reporting on greenhouse gases (GHG) emissions, energy use and energy production. Who has to report? The obligation to register and report under NGERS rests with the Australian controlling corporation of a corporate group. The corporate group includes all subsidiaries and any facilities owned by joint ventures or partnerships where a corporate member is nominated as the responsible entity. The corporate group needs to report if facilities over which it has operational control emit GHGs, or consume or produce energy, over specified thresholds. The thresholds are: Annual Threshold Facility Threshold Corporate Group Thresholds (Financial Years) 2008/ / /11 and onwards Energy production (terajoules) Energy consumption (terajoules) GHG Emissions (kilotonnes of carbon dioxide equivalence) Importantly, even if only one of the three corporate group thresholds is met, reporting on all three areas (energy consumption, energy production and GHG emissions) is required. However, if a corporate group has operational control over a facility that meets the facility threshold, but does not meet the corporate group threshold, it need only report on that facility. Australia s response to Climate Change The Australian Government has introduced a Direct Action Plan to reduce carbon emissions to 5% below 2000 levels by The main feature is the creation of a $2.55 billion Emissions Reduction Fund which provides financial incentives for business to reduce their emission. This scheme is administered by the Clean Energy Regulator which will run reverse auctions to purchase emission reductions at the lowest available cost. The Regulator will enter into contracts with successful bidders which guarantee payment in return for delivery of emissions reductions. The other feature of the Plan is to establish a Green Army of participants between 17 and 24, charged with the clean-up and conservation of the environment in local communities throughout Australia. The Australian Government has allocated more than $360 million for the program over four years from 1 July 2015 to support 500 projects each year.

32 32 About Holding Redlich Holding Redlich is a leading national Australian commercial law firm. We are one of Australia s top 20 law firms with the resources and expertise of more than 320 staff, including 155 lawyers, 50 of whom are partners, across offices in Melbourne, Sydney and Brisbane. Our clients do not just receive legal advice. They receive advice they can use, tailored to their needs, underpinned by the very best legal thinking and expert industry knowledge. We tackle projects with a commitment to excellence and business focus. An understanding of our clients commercial issues coupled with impeccable application of the law brings results. And above all else, we understand that our job is to look after our clients and their best interests. Integrity and trust are at the core of our relationships with them. The firm s key areas of practice include: Administrative Law Competition & Consumer Law Corporate & Commercial Law Dispute Resolution & Litigation Immigration Law Intellectual Property Mergers & Acquisitions Planning, Environment & Sustainability Privacy & Data Protection Project Finance Property & Real Estate Regulatory Royal Commissions & Commissions of Inquiry Workplace Relations & Safety. In addition, the firm has developed extensive knowledge of, and experience working in, the following industries: Agribusiness Construction & Infrastructure Government Information Technology Pacific Region Property & Real Estate Startups & Emerging Enterprises Superannuation, Funds Management & Financial Services Technology, Media & Communications Transport.