Australia is a fantastic market for businesses of all shapes and sizes. Many international corporations come to Australia to take advantage of our access to the Asia-Pacific region and our stable, wealthy economy. The laws that protect local companies and help them flourish are largely underpinned by strong corporate governance regulations. To register a company in Australia, businesses are required to meet certain minimum requirements for directorship and corporate governance. This not only ensures that local companies behave ethically, but also powers the system that allows businesses to thrive. If your company is moving to Australia or establishing a local division, it pays to understand the benefits of good corporate governance.
Provides Practical Decision-Making Tools
The first and most important role of strong corporate governance is to provide ways for companies to make decisions. Good corporate governance leads the way in helping organisational members of all levels to make decisions and execute plans. This ability to respond using predictable and familiar methods brings consistency to a business that increases operational efficiency and effectiveness. Promoting stability and reliability in a business’ decision making increases the chance that a company will be able to adapt to Australian markets and meet the demands of their customers. The ultimate result is stronger companies, better performance and management that leads to more successful strategies. Board members particularly benefit from strong governance procedures, giving them a better understanding of regulations and how they can leverage organisational resources.
Maintains Investor Confidence
Under Australian corporate law, there are two kinds of companies that can generate investment from outside the business:
- Private Companies. Private companies are Australia’s most popular type of business. They allow small companies to accept investment from private individuals while also providing legal protection for the owners and officers of a company. Private companies are required to have a minimum of one director.
- Public Companies. Public companies get their name from their ability to trade on the Australian Securities Exchange (ASX). Listing on the ASX allows businesses to raise funds from public shareholders. Because of their larger size, public companies are required to have a minimum of three directors and one secretary.
Regardless of company structure and size, Australia’s minimum directorship and corporate governance requirements are in place to protect investors and shareholders. Maintaining strong corporate governance procedures can give your investors the confidence to stay with the business and help power its growth and profitability.
Represent the Interests of Shareholders
In public companies, directors are appointed by shareholders. It is the responsibility of the board of directors to operate the company in the shareholders’ best interests. Strong corporate governance creates a culture where the needs of shareholders are effectively balanced against the company’s social and economic needs, rather than letting one or the other win out. Corporate governance measures also make it simpler for boards to reach decisions and act transparently. In turn, that transparency can become efficiencies and financial success, attracting further investment from shareholders and allowing the business to achieve its objectives.
Reduces Risk and Corruption
The Australian corporate climate is underpinned by strong regulations and rule of law. All companies are expected to behave ethically and legally, and it creates an environment where compliant businesses can flourish. Australia’s law-abiding culture encourages companies to reduce their risk and take action when there are internal signs of non-compliance. Reducing risk ultimately creates businesses that do not tolerate corruption or wastage, improving outcomes for the investors and shareholders.
Establishing an Australian Board of Directors? Contact Australian Corporate Governance Today
Companies that move to Australia are required to establish boards to oversee their local operations. Requirements vary depending on your corporate structure, and in some cases, you may need one or more resident directors before you can commence operations. Australian Corporate Governance has networks of experienced directors and consultants that can make sure your business is compliant. We assist businesses with navigating the Australian system, and our network can provide advice on everything from establishing your business to growing in the market. Speak to us today about our services and for more information on how we can help your business.