If you want to expand your business portfolio without establishing an entirely separate company in Australia, you might consider setting up a subsidiary company. 

There are several ways to achieve this, and establishing a subsidiary often proves to be an effective alternative to launching a completely separate business entity altogether. 

So first thing’s first – what is a subsidiary company?

What Is A Subsidiary Company?

A subsidiary company is a business that is owned or controlled by a holding or parent company. The subsidiary is a separate legal entity distinct from its parent, which helps isolate risks and provides added protection for the overall corporate group. This structure is increasingly popular in 2025 as companies seek to enhance operational flexibility while limiting liability.

What Does A Subsidiary Company Do?

A subsidiary company manages the day-to-day operations, while the parent or holding company typically retains ownership of assets and investments. This clear separation allows each entity to focus on its core functions and minimise risk exposure.

Operating as an independent legal entity, a subsidiary can enter into contracts, own assets, borrow funds, and undertake commercial activities – all while benefiting from the strategic support of its parent company.

Benefits Of Setting Up A Subsidiary Company

There are several benefits to establishing a subsidiary company.

The parent company’s liability is limited, management responsibilities can be segregated, and you have the opportunity to diversify your branding separate from the parent entity. This setup is particularly advantageous if you’re looking to expand your range of services or if you wish to enter the Australian market as a foreign company.

If you are a foreign company establishing a subsidiary in Australia, you can also isolate your financial reporting to cover only your local operations, simplifying compliance with Australian tax and regulatory requirements.

Difference Between A Branch And A Subsidiary

A foreign branch operates as an extension of an existing international business and is not a separate legal entity. In contrast, a subsidiary is established as an independent company under the oversight of a parent organisation. A foreign corporation setting up an Australian branch must register as a foreign company, whereas creating a subsidiary provides clearer legal separation and risk mitigation.

Choosing between incorporating as a subsidiary or registering as a branch office requires careful consideration of setup requirements, liability allocation, and tax filing frequency. In 2025, many companies are increasingly favouring the subsidiary model to compartmentalise risk and tailor financial reporting to their Australian operations.

How Do I Set Up A Subsidiary Company?

To set up a subsidiary in Australia in 2025, you must comply with current regulations and tax requirements, and formally register with the Australian Securities and Investment Commission (ASIC)

It is essential to consider your business structure carefully to ensure that your subsidiary aligns with your long-term strategic objectives. Understanding the implications for liability and financial reporting can help optimise your corporate setup.

If you already operate an established company, you might also consider setting up a dual-company structure to increase flexibility and potentially benefit from improved tax outcomes.

Additionally, our company registration service is tailored to help you efficiently navigate the legal requirements so that your subsidiary is fully compliant from day one in 2025.

What You’ll Need

When setting up your subsidiary, you should have the following in place:

  • Company Name – Choose a distinctive name that reflects your subsidiary’s brand identity.
  • ABN – Apply for an Australian Business Number, an 11-digit identifier for your business or organisation.
  • ACN – Obtain an Australian Company Number, a compulsory 9-digit number that must appear on all company documents.
  • Foreign Companies
    • Select a local representative to act on behalf of your subsidiary.
    • Set up an Australian bank account with a local financial institution.
Example 1
Lan, Jenny and Dhruv have been running a successful restaurant for several years and now wish to establish three additional food ventures with distinct concepts. Instead of forming three separate companies, they opted to set up three subsidiary companies under their parent organisation, thereby diversifying branding and management while compartmentalising legal risks. 
Example 2
Ben and Atiwat, who operate a mobile application game company in Thailand, are looking to expand into the Australian market in 2025. Although advice from local contacts suggested setting up an Australian branch for cost-effectiveness, they chose to form a subsidiary instead. This strategy allows them to focus their financial reporting exclusively on their Australian operations and limit any potential legal issues. They appointed a local representative as a director to oversee the new venture.

In 2025, the trend towards establishing subsidiaries is on the rise as businesses seek to isolate risks and streamline operations across different markets. By leveraging the latest regulatory reforms and improvements in corporate governance, forming a subsidiary can offer you greater operational flexibility and enhanced brand protection. For further insights into structuring your business for success, check out our updated guide on business structure matters and explore our legal advice for startups.

Need Help?

If you are planning to operate a separate business under an existing company or if you are a foreign company looking to enter the Australian market, setting up a subsidiary company might be the ideal solution for you.

Our co-founder has answered some of the common legal questions we receive from our clients. There are plenty of useful insights discussed in the video below that can help you get started on the right foot – watch the video here:

To establish a subsidiary, you will need to register with the Australian Securities and Investment Commission (ASIC). We’d be happy to assist with organising all the necessary company documentation, from appointing directors and shareholders to ensuring compliance with the latest legal requirements.

Reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or call 1800 730 61.

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