If you have been researching how to start a business, you have probably come across the phrase "articles of incorporation". It is standard terminology in the United States, but in Australia the same idea is split across two very different documents. The closest Australian equivalents are the company constitution, which is the internal rulebook, and the certificate of registration issued by the Australian Securities and Investments Commission (ASIC), which is the proof that the company exists at all.
This article walks through how incorporation actually works in Australia: who is involved, what happens at the moment ASIC registers a company, how the internal rulebook gets chosen, and the obligations that kick in once the company exists. Most of it comes down to one Act, the Corporations Act 2001 (Cth), and a handful of decisions you make at the point of registration. Understanding the moving parts before you register will save you from having to fix them later.
The cast: who does what
Company incorporation in Australia involves a small cast, and each player has a distinct job.
- ASIC: the national corporate regulator. It receives the application, registers the company, issues the Australian Company Number (ACN) and the certificate of registration, and keeps the public register recording the company's details.
- The company: once registered, it becomes a separate legal person. It can own property, enter contracts, and sue or be sued in its own name.
- Directors and shareholders: the people who run the company and the people who own it. Both become bound by the company's internal rules when they take office or buy shares.
- The Corporations Act 2001 (Cth): the statute that creates the whole system. It sets out how a company is registered, what powers it has, what internal rules apply by default, and what must be reported to ASIC afterwards.
The essential division of labour is between ASIC and the company's own documents. ASIC's involvement is about existence: it decides whether the company may be registered and records that fact publicly. The company's constitution, or the default rules in the Act, is about behaviour: how decisions are made once the company is up and running.
What registration actually produces
Registration is the trigger for everything else. Under s 117 of the Corporations Act 2001 (Cth), an application for registration is lodged with ASIC, and under s 118 ASIC may then give the company an ACN, register it, and issue a certificate stating the company's name, ACN, type, the State or Territory in which it is registered, and the date of registration.
The company itself comes into existence as a body corporate at the beginning of the day on which it is registered, under s 119, and it stays in existence until it is deregistered. This is why the certificate of registration is not the Australian version of "articles of incorporation". It is not a rulebook at all. It is evidence that the company exists, and it is the document banks, investors, landlords and suppliers will ask to see when you open an account, sign a lease or take an order.
Registration also produces the two structural features most founders are after.
- A separate legal entity with real powers: under s 124, a company has the legal capacity and powers of an individual, both in Australia and overseas, plus the specific power to issue and cancel shares. That power to issue shares is what makes a company "investment-ready": it gives you a mechanism for selling equity to investors without restructuring the business.
- Limited liability: for a company limited by shares, s 516 provides that a member need not contribute more than the amount, if any, unpaid on their shares. If the company fails, creditors generally cannot reach the personal assets of shareholders beyond any unpaid amount on their shares. Limited liability is not absolute: directors can still be personally exposed in some situations, and lenders routinely ask directors for personal guarantees, but the statutory starting point is that member liability is capped.
The rulebook: replaceable rules, a constitution, or both
Once the company exists, something has to govern how it runs. Under s 134, a company's internal management may be governed by three things, in any combination: the replaceable rules in the Act, a constitution, or both.
The replaceable rules are standard provisions of the Corporations Act 2001 (Cth) that apply automatically to a company unless they are displaced. They are set out in the legislation itself, not created by ASIC. The table in s 141 shows the range: the powers of directors, how directors are appointed, remunerated and removed, how directors' meetings and members' meetings are called and run, quorums and voting, how dividends are decided, pre-emptive rights for existing shareholders on new share issues, and how shares are transferred. For a company registered after 1 July 1998, these rules apply by default under s 135 if the company does not adopt its own constitution.
A constitution replaces or varies those defaults with rules tailored to the company. It can deal with anything the Act does not make mandatory: how many directors there are, what they need a special resolution for, what happens to shares when a founder leaves, whether existing shareholders get first refusal on new issues, and how deadlocks are resolved. Whatever is adopted, constitution and replaceable rules have a contractual effect: under s 140 they operate as a contract between the company and each member, between the company and each director and secretary, and between members themselves.
One feature of that contract is worth knowing before you sign anything. Under s 140(2), a member is not bound by a later amendment to the constitution that requires them to take up additional shares, increases their liability to contribute, or restricts the transfer of shares they already hold, unless they agree in writing. In other words, the founding shareholders cannot have new obligations of that kind imposed on them by majority vote.
The third option is a hybrid: a constitution that adopts some replaceable rules by reference and customises the rest. This is common in practice. Founders often keep a workable default such as pre-emption on new issues while writing bespoke rules for director appointment and dispute resolution. The replaceable rules are generic and assume a fairly simple, single-class company, so they tend to fit poorly once there are multiple founders, different classes of shares, or outside investors. That is the point at which a tailored constitution starts to earn its keep.
What happens after you register
Registration is the beginning of the company's obligations, not the end. The most visible recurring obligation is the ASIC annual review. ASIC sends an annual statement to every registered company, usually soon after the anniversary of its registration, and the company must then do three things, as ASIC explains: pay the annual review fee, check the company details on the statement and update any that are wrong, and have the directors pass a solvency resolution.
The details matter more than they look. Company changes such as a new address, director or share structure must be lodged with ASIC within 28 days of the change, or late lodgement fees apply. The solvency resolution, required under s 347A, must be passed within two months of the annual review date. If the directors cannot pass a positive resolution, the company must notify ASIC within seven days. The annual review fee is indexed each year and for most proprietary companies currently sits at just over $300, with a much lower rate for special purpose companies.
Tax registration follows quickly behind. The company needs an Australian Business Number (ABN) and a Tax File Number (TFN), and it must register for GST if its projected GST turnover is $75,000 or more in a 12-month period, as the Australian Taxation Office sets out. Once required to register, the company must do so within 21 days. Whether PAYG withholding, superannuation and other obligations apply depends on whether the company employs staff, which is where an accountant earns their fee.
Privacy is a common blind spot. Under the Privacy Act 1988 (Cth), a business with an annual turnover of $3 million or less is generally not covered by the Act, but the Office of the Australian Information Commissioner lists important exceptions: health service providers, businesses that trade in personal information, contractors providing services under a Commonwealth contract, credit reporting bodies, operators of residential tenancy databases, businesses related to a covered entity, and businesses that opt in. If any exception applies, the company must comply with the Australian Privacy Principles.
Beyond those regimes, the company's day-to-day legal exposure depends on what it does: selling to consumers brings consumer guarantees into play, and hiring staff triggers minimum wage, superannuation and work health and safety obligations. None of this is set up by the certificate of registration. It is the price of the separate legal personality you asked for.
Where companies trip up
A few recurring mistakes show up around incorporation, and most are cheap to avoid at the start.
- Names are not brands: Under s 147, a company name is available only if it is not identical to a name already reserved or registered, and it must comply with ASIC's rules on acceptable names, including showing the company's legal status such as "Pty Ltd" and its member liability. But passing ASIC's name check gives you no exclusive rights to the name. As IP Australia explains, a business or company name is not intellectual property; a registered trade mark is the right that lets you stop others trading under a similar name. If the brand matters, the trade mark application should be planned alongside, not after, incorporation.
- Default rules do not fit everyone: The replaceable rules assume a group of directors and members. Several of them simply do not apply while one person is both the sole director and the sole shareholder, because meeting, quorum and voting rules assume more than one participant. A founder planning to run the company alone should check which defaults actually apply before relying on them.
- Special purpose companies are a niche tool: ASIC recognises companies with constitutions that restrict them to a narrow purpose, such as holding a single asset or running one development. They attract a lower annual review fee, but the restricted constitution is a real constraint, not a discount trick. Using one for a trading business would be a structural mistake.
- The constitution goes stale: A constitution drafted for two co-founders says nothing useful once there are five shareholders and an investor. Founders who skip a constitution entirely, or never update one, end up governed by generic defaults that do not match the deal they actually made. A shareholders agreement sits alongside the constitution and covers the ownership side: what happens on exit, how deadlocks are broken, how new shares are priced. The two documents do different jobs and both deserve attention.
When you should get a lawyer involved
The registration process itself is administrative, and most founders can complete the ASIC application online. The value of legal advice concentrates at the decisions around the edges.
Before registration, a lawyer helps with the choices the application form does not ask about: whether a proprietary company is the right structure at all, what the constitution should say, whether the proposed name is clear of existing brands, and how any pre-incorporation contracts should be handled so the company adopts them properly once it exists.
At registration, the drafting choices are where the leverage sits. A tailored constitution for a company with multiple founders, share classes or investor expectations is substantially different from the replaceable rules, and the differences only surface when something goes wrong: a deadlock, a founder exit, a disputed share transfer. Having those rules written deliberately, with the shareholder agreement alongside, is far cheaper than renegotiating them under pressure.
After registration, a lawyer picks up the compliance threads: trade mark filings, employment contracts before the first hire, reviewing ASIC statements, and advising on changes to share structure or director appointments before they are lodged.
The governance choices behind a two-page certificate
If there is one thing to take from how incorporation works in Australia, it is this: the certificate of registration is the easy part. ASIC's decision to register the company takes effect at the beginning of the registration day, the certificate is issued, and the company exists. That part is quick, cheap and largely standardised.
The value, and the risk, concentrate in the choices the certificate does not record: the constitution or default rules that will govern every decision the company makes, the agreements between the founders, and the name the company trades under. Getting those right at the start is a fraction of the cost of unwinding them later, and it is where a lawyer's input at incorporation earns its keep. If you are weighing up incorporation and want to know what the internal rules should say before you commit, a conversation about your structure and founding documents is a sensible first step.