Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Expanding into Australia or restructuring your group? Setting up a subsidiary company can be a smart way to grow, manage risk, and operate locally with confidence.
If you’re not familiar with Australian law, terms like “subsidiary,” “wholly owned subsidiary,” and “Australian subsidiary” can feel a bit technical. The good news is the process is well‑established - and with the right steps, your subsidiary can be up and running smoothly.
In this guide, we’ll explain what a subsidiary company is in Australia, how it compares to a branch, the practical steps to set one up, the key laws to follow, and the core legal documents you’ll need. You’ll also see where specialist advice (legal and tax) fits in so you can move forward with clarity.
What Is a Subsidiary Company in Australia?
A subsidiary company is a separate Australian company that’s controlled by another company (the “parent” or “holding” company). Control usually means the parent owns more than 50% of the shares or the majority of voting rights. If the parent owns 100% of the shares, it’s a wholly owned subsidiary.
Crucially, the subsidiary is its own legal entity. It can enter contracts, hire staff, open bank accounts, and own assets in its own name. In most cases, the parent is not liable for the subsidiary’s debts - that limited liability is a key reason businesses choose this structure.
In Australia, subsidiaries are commonly incorporated as proprietary limited companies (Pty Ltd). They must be registered with the Australian Securities & Investments Commission (ASIC) and comply with the Corporations Act. If you’re looking for a straightforward, locally compliant structure with clear separation from the parent, a subsidiary often fits the bill.
Subsidiary vs Branch: What’s The Difference?
When expanding into Australia, you typically choose between:
- Subsidiary: You incorporate a new Australian company (usually a Pty Ltd). It’s a separate legal entity, with local governance, its own Australian Company Number (ACN), and its own obligations.
- Branch (foreign company registration): Your overseas company registers to carry on business in Australia without creating a separate legal entity. The parent remains directly responsible for the Australian operations.
There’s no single “right” option - it depends on commercial, legal, and tax factors. Many businesses prefer a subsidiary for clearer risk separation, brand positioning, and operational autonomy. Others choose a branch if they want to operate under the same legal entity worldwide.
Important: An overseas parent does not have to set up a subsidiary - registering a foreign company (branch) is a valid alternative. It’s wise to compare both pathways with your legal and tax advisers before you decide.
How To Set Up An Australian Subsidiary (Step‑By‑Step)
Here’s a practical roadmap to get your subsidiary established the right way from day one.
1) Choose Your Company Structure And Governance
Most subsidiaries are set up as a proprietary limited company (Pty Ltd). This offers limited liability and a flexible, private ownership model that suits both local and international groups.
- Appoint at least one director who ordinarily resides in Australia. For the specifics on this rule and good practice, see our guide to Australian resident director requirements.
- Decide who the shareholder(s) will be. For subsidiaries, the parent company is usually the sole shareholder (wholly owned) or the majority shareholder.
- Adopt a Company Constitution that reflects group governance, director powers, and share rights. Many groups tailor constitutions to align with parent policies.
2) Register The Company With ASIC
Submit your details (company name, registered office, directors, shareholders, and share structure) and obtain an ACN. If you’d like support from start to finish, our team can handle the full company set up for you, including ASIC lodgements and core documents.
If your parent entity is overseas, you’ll generally provide the foreign registration details and certified copies of relevant corporate records during the process. Many international groups prefer a complete, end‑to‑end subsidiary set up so everything is aligned with group requirements from day one.
3) Obtain ABN And Consider Tax Registrations
Once incorporated, your subsidiary can apply for an Australian Business Number (ABN). Depending on turnover and activities, the company may need to register for Goods and Services Tax (GST) and other tax obligations.
Note: Sprintlaw is a commercial law firm - we don’t provide tax or accounting advice. It’s important to speak with your tax adviser about ABN, GST, transfer pricing, withholding taxes, payroll tax, and any specific structuring questions for your group.
4) Set Up Banking, Systems And Local Operations
Open Australian bank accounts, set up payroll and accounting systems, and establish internal controls that fit your parent company’s policies. If you’ll be hiring locally, prepare compliant contracts and workplace policies (more on these below).
5) Put Essential Contracts And Policies In Place
Before you trade, make sure you’ve got the right paperwork to manage risk and set expectations with customers, suppliers, and staff. This usually includes a Company Constitution, a Shareholders Agreement (if not wholly owned), customer and supplier contracts, and a Privacy Policy if you’ll be collecting personal information.
6) Maintain Ongoing Compliance
After launch, keep company records up to date, pay ASIC annual review fees, and report director or address changes promptly. Build a calendar for key dates (ASIC, tax, and employment obligations) to stay on top of compliance.
Key Legal Requirements And Ongoing Compliance
All Australian companies - including subsidiaries - must follow local laws. Here are the core areas to focus on.
1) Corporations Law And ASIC
Your subsidiary must comply with the Corporations Act and ASIC’s company administration rules. This includes maintaining accurate registers, keeping financial records, paying annual review fees, and notifying ASIC of company changes (such as new directors or share issues).
Directors have legal duties, including acting in the company’s best interests and with care and diligence. Many parent groups also adopt group‑wide governance frameworks and require clear execution processes for contracts (for example, using section 127 execution where appropriate).
2) Employment And Workplace Law
If you plan to employ staff, set clear terms in an Employment Contract, and ensure compliance with the Fair Work system (minimum pay, leave entitlements, termination processes) and Work Health and Safety laws. Remember to set up superannuation and payroll processes correctly, and train managers on Australian workplace standards.
3) Australian Consumer Law (ACL)
If you sell goods or services to Australian consumers or businesses, you’ll need to comply with the Australian Consumer Law. This includes rules on consumer guarantees, refunds, unfair contract terms, and marketing claims. Pay particular attention to how you advertise, price, and handle complaints - misleading or deceptive conduct (covered in section 18 of the ACL) is prohibited.
4) Privacy And Data Protection
Many Australian subsidiaries will need a clear, accessible Privacy Policy and robust data handling practices. The Privacy Act applies to most larger organisations, but it can also apply to smaller businesses in specific circumstances (for example, health service providers, businesses that trade in personal information, or contractors handling sensitive data). Don’t assume a $3 million revenue threshold automatically excludes you - assess your activities carefully.
5) Contracts, IP And Brand Protection
Use well‑drafted contracts with customers and suppliers to set expectations on scope, fees, IP ownership, liability, and termination. Protect your brand with trade marks and consider confidentiality and IP assignments for employees and contractors to keep ownership clear. If your group plans to license IP to the subsidiary, document that arrangement properly to avoid ambiguity later.
6) Tax And Finance
GST, income tax, transfer pricing, and payroll tax all require careful planning. Because every group structure is different, speak with your tax adviser about your obligations and opportunities. As noted earlier, Sprintlaw focuses on commercial and corporate law - we’ll work alongside your accountant or tax specialist to cover the legal side.
What Legal Documents Will Your Australian Subsidiary Need?
Every business is different, but most subsidiaries benefit from having the following documents tailored to their operations and group structure.
- Company Constitution: Your company’s governing rules (director powers, meetings, share rights). Many groups adopt a custom Company Constitution to align with parent policies.
- Shareholders Agreement: If the subsidiary isn’t wholly owned, a Shareholders Agreement sets out decision‑making, share transfers, exit scenarios, and dispute resolution between owners.
- Board/Director Resolutions: Authorise key actions (opening bank accounts, signing leases, hiring executives) and keep clean records of decisions. Many groups standardise these for consistency across jurisdictions.
- Customer Terms or Service Agreements: Spell out pricing, scope, deliverables, IP, confidentiality, warranties, and liability caps with your customers in Australia.
- Supplier And Contractor Agreements: Lock in performance standards, timeframes, pricing, IP assignments, and termination rights with suppliers and independent contractors.
- Employment Contracts And Policies: Use compliant Australian Employment Contracts, plus policies on conduct, health and safety, leave, privacy, and IT usage.
- Privacy Policy: If you collect personal information, an Australian‑compliant Privacy Policy explains what you collect, why, and how you store, use, and disclose data.
- Website or App Terms: If you trade online, terms for your website or platform help set rules for users and limit risk. Pair these with clear product, pricing, and refund information.
- Intragroup Agreements: Where the parent licenses IP or provides shared services to the subsidiary, document the arrangement (fees, scope, responsibilities) to keep the relationship transparent.
You may not need all of these on day one, but the right mix will reduce risk, streamline operations, and prevent disputes. If you’re unsure where to start, we can help you prioritise what’s essential for your launch and growth plans.
Frequently Asked Questions
Do We Have To Set Up A Subsidiary If The Parent Is Overseas?
No. You can either register a new Australian company (subsidiary) or register your existing overseas company to carry on business in Australia (a branch). A subsidiary offers clearer separation and local autonomy, while a branch keeps everything within the same legal entity. Consider your appetite for risk, commercial goals, and tax position before deciding.
What’s A Wholly Owned Subsidiary?
A wholly owned subsidiary is a company in which the parent owns 100% of the shares. It’s still a separate legal entity, but the parent has full control over decisions and ownership. Some reporting and governance processes may be simpler in practice because there are no minority shareholders.
Can We Use Overseas Templates For Our Australian Contracts?
It’s better to use Australian‑law contracts. Templates from other countries may not reflect Australian Consumer Law, unfair contract terms rules, or local privacy requirements. Localising your documents helps you comply with Australian law and sets clearer expectations with your customers and suppliers.
Who Should Sign Contracts For The Subsidiary?
Authorised directors or officers of the subsidiary should sign. Many companies adopt a clear delegation of authority and standardise execution practices to avoid confusion. Your constitution or board resolutions can spell this out so teams know who’s authorised to bind the company.
How Long Does It Take To Set Up A Subsidiary?
Once your details are ready, registration can be quick - often within days. Allow extra time for obtaining certified parent documents, opening bank accounts, onboarding payroll, and preparing your contracts and policies. A well‑planned timeline makes launch smoother.
Key Takeaways
- A subsidiary company is a separate Australian entity controlled by a parent company; it offers limited liability and local operational autonomy.
- An overseas parent can choose a subsidiary or a branch; consider risk, governance, and tax factors before deciding (there’s no universal “must”).
- Setting up involves ASIC registration, ABN and relevant tax registrations, local banking and systems, and a compliance plan for ongoing obligations.
- Core compliance areas include corporations law, Fair Work and WHS, the Australian Consumer Law, privacy and data protection, contracts, and IP.
- Essential documents typically include a Company Constitution, Shareholders Agreement (if applicable), customer and supplier contracts, Employment Contracts, and a Privacy Policy.
- Work with legal and tax advisers early so your structure, documents, and processes are fit for purpose and aligned with your group strategy.
If you’d like a consultation on setting up a subsidiary company in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
