Corporate regulation

in Australia.
November 2010

The following information provides an overview and general guide to corporate regulation in
Australia. Regulatory arrangements can change from time to time so potential investors should
consult the websites of relevant Australian government agencies and, most importantly, should
seek professional advice before entering any commitment based on this information.

Corporate regulation bodies

There are three major government agencies involved in regulation of corporations in Australia:

• The Australian Securities & Investments Commission (ASIC) administers the national Corporations Act 2001 and enforces
company and financial services laws to protect consumers, investors and creditors.

• The Australian Competition & Consumer Commission (ACCC) administers the national Competition and Consumer Act 2010
and seeks to protect consumers and promote fair trading and competition in trade and commerce.

• The Australian Prudential Regulation Authority (APRA) regulates prudent management of deposit taking institutions, insurance
companies, and larger superannuation funds.

Operating a company in Australia

The ASIC regulates companies conducting business in Australia by:

• Registering each company with a unique number, and recording the number, name, directors and other information on a
public register;

• Administering the legislation regarding financial reporting and mergers and acquisitions;

• Investigating and enforcing action against misconduct by company directors and officers; and

• Receiving prospectuses before money is raised.

Registering a foreign company
A foreign company conducting business in Australia, other than through an Australian subsidiary, must register as a foreign
company with the ASIC.

In order to gain registration a foreign company must:

• Ensure the company name is available and have it reserved;

• Lodge an application form and fee with the ASIC, along with certain company documents;

• Ensure that any documents that are not written in English are translated and properly certified; and

• Appoint a local agent to represent the company in Australia.

Post-registration obligations for a foreign company

Once registered, a company is required to comply with the Corporations Act. Some of the obligations involve the company:

• Displaying the registered name in its offices;

• Displaying the company name, liability of its members and registration number on certain documents;

• Lodging financial statements with the ASIC; and

• Lodging written notice with the ASIC about changes to the company constitution, directors, local agents and the address of
the registered office.

Obligations for operating a business

If a company carries on a business in a name which is different to its company name, it must register the business name with
the appropriate State or Territory authority.

Registration or use of a business name does not create a legal entity (whereas registration of a company does) and does not
allow the use of privileges to which a company is entitled, such as a corporate tax rate or limited liability.

Regulation of competition
The following activities are prohibited under the Competition and Consumer Act 2010.

• Most price agreements, although if there is significant benefit to the public, price agreements can be authorised;

• Agreements containing exclusionary provisions (primary boycotts);

• Secondary boycotts (other than consumer boycotts) that substantially lessen competition or result in substantial loss or
damage to the target of the boycott;

• Misuse of market power: using substantial market power to deliberately damage a competitor or exclude other businesses
from a market;

• Exclusive dealing: imposing restrictions on another person’s freedom to choose with whom, or in what, they deal, where such
restrictions substantially lessen competition;

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• Third line forcing: supplying a business or consumer on condition that the acquirer also purchases another firm’s products,
although this conduct can be authorised if there is significant public benefit;

• Resale price maintenance: suppliers specifying a minimum price below which goods or services may not be resold or
advertised (however, they may set maximum prices); and

• Mergers and acquisitions that have the effect or likely effect of substantially lessening competition in a market.

Details of key competition regulation issues are discussed below.

Mergers and acquisitions

The Competition and Consumer Act 2010 prohibits a corporation from directly or indirectly acquiring shares or assets if the
acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

The ACCC will take a number of factors into account when making a decision including:

• The actual and potential level of import competition in the market;

• The height of barriers to entry to the market;

• The level of concentration in the market;

• The degree of countervailing power in the market;

• The likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or
profit margins;

• The extent to which substitutes are available in the market or are likely to be available in the market;

• The dynamic characteristics of the market, including growth, innovation and product differentiation;

• The likelihood that the acquisition would result in the removal from the market of a vigorous and effective competitor; and

• The nature and extent of vertical integration in the market.

The merger provisions can also apply to transactions that occur outside Australia if the target corporation is incorporated
or carries on business in Australia and the transaction would have, or be likely to have, the effect of substantially lessening
competition in a market in Australia.

The vast majority of mergers do not raise competition concerns. Of the mergers considered by the ACCC each year, a
significant proportion of these are assessed as not requiring review and the remainder undergo a confidential or public merger
review.

Consumer protection
The Competition and Consumer Act 2010 prohibits misleading or deceptive advertising and promotion and specifically
prohibits misrepresentations about where products are made, price, quality or performance. The consumer guarantees regime
under the Act provides consumers with certain guarantees in respect of the supply of goods and services. Remedies are
available to consumers when goods or services fail to meet consumer guarantees. Remedies can generally include refunds,
repairs or replacements.

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There are a number of mandatory product safety and information standards, and consumer product bans, that apply in
Australia. Suppliers also have a mandatory obligation to report product-related instances of serious injury, illness or death.
There are a range of penalties for non-compliance, including disqualification from managing a corporation. Visit
www.productsafety.gov.au for more information.

Unconscionable conduct
The Competition and Consumer Act 2010 prohibits unconscionable conduct in both consumer transactions and commercial dealings.

The Competition and Consumer Act 2010 does not define unconscionable conduct but the concept involves some form of
serious misconduct or behaviour that is clearly unfair or unreasonable.

Product liability
A person who is injured, or whose property is damaged, by a defective product, may have a right to compensation by the
manufacturer of the product. Legal action against the manufacturer or importer of defective products may be brought by ACCC.

Industry codes of conduct

The Competition and Consumer Act 2010 prohibits contraventions by a corporation of any prescribed industry code of conduct
that applies to it. There are currently four prescribed codes: the Franchising Code, the Horticulture Code, the Oil Code and the
Unit Pricing Code.

Exceptions to the competition rules

If particular conduct results in sufficient public benefit, ACCC may grant businesses immunity from legal proceedings by itself
or private parties concerning some anti-competitive practices which would otherwise be illegal. This permission is called
‘authorisation.’ Authorisation is not available for misuse of market power.

Businesses can also notify the ACCC about exclusive dealing. ‘Notification’ gives automatic protection from court action until
the ACCC removes the protection.

Applications for authorisation, notifications and related submissions are kept on a public register. Interested parties have the
right to ask the Australian Competition Tribunal to review decisions of the ACCC, and the Tribunal can uphold, vary or set aside
the Commission’s original decision.

Regulation of financial institutions

APRA sets standards for the prudent management of banks and other deposit-takers, insurance companies and friendly
societies to maximise the likelihood that they will remain financially sound and able to meet their obligations to depositors and
policyholders.

APRA has powers to require financial institutions to observe prudential standards such as appropriate capitalisation, liquidity
and governance, and to intercede if they think that the interests of depositors, policyholders or members are at risk.

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APRA also has extensive powers of investigation, intervention and administration and is not responsible for product disclosure
standards, customer complaints or licensing agents and brokers. (These are the responsibility of the asic.

OECD Guidelines
OECD Guidelines for Multinational Enterprises are non-binding voluntary principles and standards for responsible business
behaviour.

The Guidelines are intended for multinational enterprises that are from, or that operate in, OECD and non-member adhering
countries (Argentina, Chile and Brazil) and cover a number of sectors including employment, industrial relations, human rights,
environment, information disclosure, competition, taxation, and science and technology.

Importantly, these Guidelines are the only comprehensive, multilaterally-endorsed set of best practice business standards for
multinational enterprises. The Guidelines and related information can be obtained from the Australian National Contact Point
website at www.ausncp.gov.au.

Useful websites
For more information on corporate regulation in Australia, go to:

Australian Securities & Investment Commission www.asic.gov.au

Australian Competition & Consumer Commission www.accc.gov.au

The Australian Predential Regulation Authority www.apra.gov.au

Gateway to Government Information & Services www.business.gov.au

Disclaimer

Any person relying on this information does so entirely at their own discretion and Austrade strongly recommends the reader
obtain independent professional advice prior to acting on this information. Any reference to companies or investment activities
is for illustrative purposes only and does not constitute an endorsement of those companies or any investment activity.
Accordingly, Austrade does not accept any liability for loss arising from reliance on the contents of this work.

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s global network of more than 100 locations in over 55 countries, we assist Australian companies to
succeed in international business and attract productive foreign direct investment into Australia.

Austrade is the first national point-of-contact for all investment inquiries. Working in partnership with business and
government, Austrade can provide your company with the information needed to establish or expand a business in
Australia.

Austrade can also help by connecting you with the right industry and government contacts as well as providing
information on investment regulations and government assistance programs.

For more information visit www.austrade.gov.au/invest

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