Why international clients need an Australian law firm

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When entering the Australian market for the first time, international clients often consider sourcing their legal support from their usual legal adviser who is based in their local jurisdiction. The perceived advantages of using a trusted adviser you already know and who is familiar with your needs and preferences can be seductive. However, there are numerous reasons why you should retain an Australian law firm to support you (and your local advisers) prior to commencing operations in Australia.

Australia’s legal system is unique

Our system of law has developed independently for over 100 years, via court and parliamentary made law. Only Australian qualified lawyers are qualified to advise on Australia’s legal regime.

Australia’s legal system is multi-layered

Australia has 3 levels of government that make laws that govern business activity in Australia – the federal government, the 8 State / Territory governments and hundreds of local governments. The interplay of laws is complex so you need local expertise to safely navigate this complexity.

Structuring options are extensive

There is an extensive range of structures that include operating as a sole practitioner, partnership, trust, joint venture, private company or a public company (including no liability, limited by guarantee and publicly listed companies). A foreign company can also register to carry on business in Australia. The potential liability of business proprietors differs depending on the structure. Further, the rate and way these structures are taxed under Australian law also varies. A local lawyer can explain the different options and recommend the most appropriate structure for your needs.

Foreign investment is directly regulated

Certain foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act (FATA) and associated regulations, together with 50 Guidance Notes issued by the Foreign Investment Review Board (FIRB), (together the Regime, which was completely re-written in 2015). Foreign investors whose proposed transactions are regulated by the Regime must make an application to FIRB for approval. There are additional associated Acts and Regulations that also apply. Regulated transactions cannot proceed without this approval and it’s a very technical area in respect of which expert local advice is a must.

Australia has active corporate regulators

Australia has many regulators of corporate activity. Recent findings of a Royal Commission into Australia’s banking and financial services sector likely means that these regulators will be more proactive and aggressive in fulfilling their regulatory function. These regulators include the Australian Prudential Regulation Authority (APRA), Australian Securities and Investments Commission (ASIC), Australian Competition and Consumer Commission (ACCC), Australian Taxation Office (ATO), federal and State / Territory Environment Protection Authorities (EPA), Fair Work Commission (FWC) and State / Territory safe work regulators. Additionally, there are industry regulators specific to the sectors in which you may be intending to operate. Australian lawyers can assist you to ensure your activities comply and avoid regulatory scrutiny.

Business activity in Australia is heavily regulated

Australia is a heavily regulated jurisdiction in comparison to many international markets. While there are advantages to this (stable economy, strong rule of law, Australia’s banking system riding out the GFC unblemished, etc), new investors to Australia can be surprised and frustrated by the practical consequences of this regulation. Things can take time, and be complicated, delaying entry however Australian lawyers can set expectations appropriately, and assist you to efficiently and effectively navigate Australia’s regulatory landscape.

“Standard” concepts and regimes, while similar, can be different

Much of Australia’s legal regime operates similarly to equivalent regimes throughout the world. However, even where the principles and similarities are strong, there can still be important differences. For example, certain pricing behavior permissible internationally is prohibited by Australia’s competition law, and Australia’s corporate law does not recognise the concept of a “merger” in the same way as other jurisdictions (although the same result can ultimately be achieved).

Australia has its own business norms

“Market practice” differs across international markets and what you consider to be the standard approach to an issue may differ in Australia. For example, the Australian approach to allocating responsibility and liability for due diligence disclosures in an M&A transaction is the opposite to the North American approach. Experienced local lawyers can assist you to understand these differences and protect your interests, as well as the local appetite for approaches to issues you are familiar with.

Personal liability for officers

Senior officers carrying on business in Australia have extensive personal duties under Australian law. In certain circumstances, failure to uphold those duties can lead to personal liability for those officers. Further, there are legislative constraints on the extent to which Australian companies can offer protection to officers for these risks. Australian lawyers can explain a senior officer’s personal duties and risks and how they can fulfil those duties, as well as the extent to which those risks can be protected against by their company.

PPSR - Personal Property Securities Register

Australia has a unique regime for the registration of security interests in personal property (PPSR). The regime is an amalgam of similar regimes operating in Canada and New Zealand (but is not the same). There are strict requirements around registration of security interests, including with respect to timing and priority. Failure to register, to register correctly or to register in time can, in certain circumstances, lead to owners of personal property losing priority for payment for, or losing title to, their property. Local expertise and advice is required to avoid these risks.

These points are not exhaustive and highlight the importance of using a local law firm to help navigate cross border business development and commercial opportunities in Australia.

The material in this blog is provided only for general information. It does not constitute legal or other advice. Contact Grondal Bruining for advice specific to your circumstances on +61 8 6500 4300.

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Don’t hesitate to contact me to discuss your plans and requirements.

Gary Thomas

Managing Principal - Grondal Bruining

Phone: +61 8 6500 4375 | Mobile: +61 414 858 584

Email: gary.thomas@grondalbruining.com.au

Website: www.grondalbruining.com.au

Limited Liability by a scheme approved under Professional Standards Legislation. Disclaimer and Terms of Use