Due Diligence

U.S. firms should exercise normal commercial prudence when doing business in the Australian market and are advised to perform due diligence on likely business partners and customers.

The U.S. Commercial Service-Australia provides the International Company Profile (ICP) program, giving useful background information on an Australian firm including financial data, trade references, company size, marketing operations, and a listing of key officers.  We can also visit the company premises to interview principals in the Sydney, Canberra, and Perth metropolitan areas.

Another avenue for due diligence information is the Australian Securities and Investment Commission (ASIC), a government agency that enforces and administers Australia’s Corporations Law and registers all companies.  For a small fee, ASIC can provide you with a “historical company extract” which will tell how long a company has been in business, whether it is registered, its principal place of business, a list of directors, and details about its share capital. ASIC can also advise on whether any of the directors have been disqualified from managing a company.

Joint Ventures/Licensing

Joint ventures (JV) are a common feature of Australia’s commercial and legal environment, and take one of several typical forms:

Unincorporated Joint Ventures

The rights and obligations of these joint venture parties are set out extensively in the JV documents.  An unincorporated JV is sometimes more suitable for a single project or business venture, for example, in sectors like the mining, oil, and gas industries.  The joint venture document usually expresses the limitations and conditions of the JV so that a broader partnership is not implied.  The application of partnership laws comes with other tax and liability implications.

Incorporated Joint Ventures

his usually involves the joint venture parties’ conducting their business through incorporation of a JV company or trust. The parties commonly set out their respective rights and obligations in a shareholder or unit holder’s agreement to resolve any dispute not regulated by the Corporations Law or the constitution of the company or trust.

Unit Trusts are devices that enable the separation of legal and beneficial interests in assets and the income derived from them.  A unit trust is a legal entity in which the entitlement of beneficiaries is expressed in units relative to the total number of fixed units.

Limited partnerships are rarely used in Australia. They are partnerships of general law and do not create separate legal entities. A limited partnership structure requires at least one general partner to have unlimited liability and partners whose liability is limited to the extent of their investment in the partnership.

For example, one participant in an unincorporated JV could be the trustee of a unit trust, while one shareholder in an incorporated JV could also be the trustee of a unit trust.

Licensing

License agreements involving Australian companies should contain the usual terms one would find in a license in the United States.  For example, the agreement should detail the type of license being granted (i.e., sole, exclusive, or non-exclusive), territory covered, license fee or royalty, licensee’s duties and obligations, period of grant and field use of the technology involved, maintenance of quality control, ownership rights in improvements and innovations made by licensee, warranties and indemnities, technical assistance and confidentiality, sub-licensing and assignments, and termination.

There are few legal and administrative requirements governing licensing in Australia. Exclusive licenses of patents, copyrights and other statutory rights require compliance with certain minor formalities. The Trademark Act of Australia provides for the registration of licensees (or ‘users’, as they are called in the legislation).

Local Professional Services

The full range of professional services such as human resources, executive recruitment, legal, financial, and real estate exist in Australia, with a greater choice and concentration in metropolitan centers such as Sydney, Melbourne, Perth, Adelaide, Canberra, and Brisbane. For the benefit of U.S. exporters, the U.S. Commercial Service-Australia maintains a list of firms known to us on our website under the heading Business Service Providers. Legal services include: Law Council of Australia, The Law Society of NSW, Queensland Law Society, The Law Society of Western Australia, The Law Society of SA, The ACT Law Society, and The Law Society of NT.

Principal Business Associations

• American Chamber of Commerce in Australia
• Australian Industry Group
• Australian Institute of Management
• Business Council of Australia
• Business South Australia
• Chamber of Commerce & Industry Queensland
• Chamber of Commerce and Industry Western Australia
• Export Council of Australia
• Institute of Management Consultants
• New South Wales Business Chamber
• Small Business Association of Australia
• Tasmanian Chamber of Commerce & Industry
• Victorian Employers’ Chamber of Commerce and Industry

Limitations on Selling U.S. Products and Services

Australia is an open and transparent market.  There are no manufacturing or service sectors in which foreign companies are not allowed to trade.