Grant Sefton, an experienced practitioner in corporate & commercial law, takes us through some of the key concepts of doing business in Australia.
Grant Sefton is an experienced practitioner in corporate and commercial law at a national and international level, having had in excess of 30 years’ experience in these fields in Australia. His clients include a host of leading public and private sector clients throughout Australia.
Grant is principal of Seftcorp Law, with a focus on Corporate and Commercial Law, International Dealmaking, Mergers & Acquisitions and Innovation Law.
Until recently, Grant was a founding partner of the Newcastle office of national legal firm Moray & Agnew Lawyers, where he was national coordinator of its commercial law practice. Seftcorp Law is now a consultant to Moray & Agnew.
Grant has been a member of IR Global for over 5 years and is co-chair of its Asia-Pacific Group. He has previously served on the committees for the Dealmaker and Commercial Law Groups. Grant is chair of Hunter Angels, which invests in start-up and early stage innovative enterprises, and is an experienced angel investor.
He is also a founding director of Hunter Founders Forum, which is dedicated to facilitating investment opportunities in innovative enterprises.
Are there any cultural points that someone considering doing business in the Australian jurisdiction should be aware of?
In Australia the business style is open, with low levels of formality. Personal relationships do matter, however there is more emphasis on getting the deal done. For some that process might seem a little more abrupt than in other Asian countries.
Australia is a large and multicultural country, and etiquette and business practices vary widely. Personal relationships are important and they can be developed easily with the right approach.
Contract law forms an important part of most business relationships and contracts are often extensive and thorough. Once a business relationship is established under a contract, it is expected that the parties will comply with the wording and intent of the contract, unless amended by agreement of the parties. It is important to properly structure business relationships based on good contracts.
There is also a focus on legislative support for individual liberties. Workplace health and safety laws, employment laws and privacy laws are all strong and need to be understood and complied with.
How easy is it to do business in the Australian jurisdiction, and are issues with transparency or corruption easily resolvable?
Australia is one of the least corrupt countries in the world and has a strong record of preventing and exposing corruption in the region. The International Corruption Perception Index for the public sector lists Australia as the 13th least corrupt nation in the world.
The World Bank Index places Australia 15th in the world for ease of doing business. When issues arise in Australia, businesses normally favour a pragmatic solution to resolve the problem. Internal and external business conflicts are often successfully resolved through discussion and negotiation. In circumstances where some form of formal dispute resolution is needed, we have a well-developed and transparent judicial, arbitration and mediation system, although in some circumstances it can be time consuming and expensive.
What is special about the Australian jurisdiction? Why should an investor or entrepreneur choose Australia as a gateway to Asia?
Many investors and entrepreneurs establish in Australia because of our open economy, with high levels of deregulation, low barriers for foreign trade, low foreign currency controls and free trade agreements with many countries. We have a strong economy, having recently recorded 26 years without a recession, which is a world record.
Australia has an excellent lifestyle, with stable government, a pleasant climate, clean water and air and good health and education. We have a well-educated workforce. There are strong and well established legislative, judicial and financial structures.
As one of the world’s most multicultural nations, many cultures are represented, including Asian. Also we have high levels of immigration from many places around the world, particularly from Asian countries. There are many languages spoken, which facilitates entry into the wider Asian market.
Australia is a resource rich country and a major exporter of agricultural products, minerals and gas. Our services sector is enjoying strong demand from many Asian nations, particularly in education, finance, professional services and information technology.
What help exists for overseas investors in terms of expert partners, trade networks or government incentives? Would you recommend a local business partner?
The Australian Trade and Investment Commission (Austrade) assists foreign companies to establish and build their business in Australia. They have offices in more than 50 countries around the world, with Austrade representatives in these offices able to converse in the local languages. It is relatively easy to get the right support and guidance for investment prospects from Austrade, and from the well-developed Australian professional services sector and the many international chambers of commerce. Australia has high levels of foreign investment, and Government policy strongly supports such investment. Various incentives are available for foreign investment from Federal and State Governments.
Local partners are a great idea for improving access to markets and smoothing out the regulatory and cultural hurdles. Most relationships with local partners include one or more well-developed contracts, such as a joint venture, distributor, license or shareholder agreement. Provided they are well-structured, there is normally no problem with establishing and developing formal relationships, or terminating them if required.
Seftcorp Law is always happy to facilitate introductions to local suitable partners and to assist in the review and due diligence of local partners, as we have done many times in the past.
What are the major regulatory barriers to entering the Australian marketplace?
Australia has relatively low barriers for doing business, and there is a focus on lowering barriers for open trade and investment. There are free trade agreements with many countries, including Asian countries, and we are actively negotiating with many others.
The Foreign Acquisitions and Takeovers Act regulates large investments by foreign investors in Australia. Under that Act, the Foreign Investment Review Board (FIRB) regulates foreign investment of 20 per cent or more in any business valued over AUD252 million. That amount is higher for certain countries with which Australia has a free trade agreement. There are special rules for foreign government investors.
FIRB can prohibit investments that aren’t in the national interest. There are also special rules relating to the acquisition of real property, including agribusiness, and there are some tax rules applying to foreign investors, such as a foreign resident capital gains withholding tax.
The Competition and Consumer Act contains restrictions on acquisition of corporations or assets that have the effect of substantially lessening competition in any marketplace.