6th Australia New Caledonia Business ForumBrisbane 18 June 2010

• Practical tips to set up your business in New Caledonia– with a local partner– with your own employees

• Choice of a structure– Non- incorporated– Incorporated

• Protecting your assets overseas

• Managing the local team

• Managing shareholders relations

• Industrial/Intellectual property– Key asset– Register trademarks/ logo/ patents/ designs/ domain

names etc. over the territory– Ascertain which entity is the owner of the IP– Set up a licence contract with local entity

No compete clause– Local joint venture partner:

In a shareholders’ agreement In a management agreement

– Local staff:In employment contracts

– Must be reasonable and limited as to area, duration and type of activity

• Sale of goods or equipment– Dispute resolution clause:

• Avoid cost of international litigation• Internal process / Mediation / Conciliation

– Retention of title clause:• Easier reclaim of unpaid goods or equipment • Must be express• Only applies to identifiable goods/equipment

• Confidentiality clause• No compete clause• Reporting• Scope and limits of authority

– In employment contract– In constitution of local company

• Assumption of broadest authority with third parties• Joint managers

• If exceeds authority: remedies

• Key clauses– In shareholders’ agreement, constitution or in

management agreement– Clauses:

• Duties, scope of authority• Reporting• Sale of shares, change of control• No compete• Confidentiality

ConstitutionShareholders’

agreement

Statutory regime Contractual

Less flexible Very flexible

Easy to enforce More difficult to enforce

Damages / Injunction / Specific performance

Damages

Not confidential Confidential

Heavy process to amend Easy to amend or to join

• Tax representative

• Representation desk

• Branch

• Company

• Temporary or permanent

• Direct implantation on local market

• Direct control by head office

• Direct profit/loss

• Unlimited liability

• Advantages– Cheap to set up / run– Local knowledge– Temporary or

permanent– Confidence with clients

and authorities– IP remains with

Australian entity

• Disadvantages– Direct commercial

and legal risk– Management of

double taxation impact on local profits

– No local partner other than as employee

• Advantages– More permanent– More confidence with

local clients and authorities

– Local partner possible– liability limited to local

market

• Disadvantages– More expensive to run– Statutory regime to

comply with– More complex

contractual set-up with mother company

• No limitation on nationality of shareholders• French particularities:

– Share capital:• Minimum amount, obligation to pay up at incorporation• Contributions: cash / assets / labour

– Cumulating directorship and employment contract– “Must be allowed to trade”– Company tax or shareholder taxation

SARL SAS SA

Full nameSociété à responsabilité limitée

Société par actions simplifiée

Société anonyme

Equivalent in Australia Pty Ltd Simplified Ltd Ltd

Members

Min.1 and max.100

Individuals

Corporate entities

Min. 1

Individuals

Corporate entities

Min. 7

Individuals

Corporate entities

Liability of members Limited Limited Limited

Share capital requirement Min. $ 1 Min. $ 1 Min. $ 54,000

Contributions

Cash

Assets

Labour

Cash

Assets

Cash

Assets

For convenience, amounts are converted into Australian dollars

SARL SAS SA

Management One or more managersDirector(s) incl. President

Choice of management structure

Board of directors Chairman of Board

General Director (executive)

Legal requirements

Must be individuals

Must be allowed to trade

Individuals

Corporate entities

Min. 3, max. 18 directors

Individuals (incl. Chairman and General Director)

Corporate entities

No employment contract

Criteria in constitution Shareholder or not Shareholder or not Shareholder or not

Authority to act for company

Manager(s)President

General directors (if provided in constitution)

General Director

Deputy General Directors (if any)

Limits to authority In constitution In constitution

In constitution

By resolution of Board

SARL SAS SA

Prohibition

Loan to managers

Loan to shareholders (unless corporate entity)

Loan to management

Loan to shareholders (unless corporate entity)

Loan to directors

(unless corporate entity)

Loan to shareholders (unless corporate entity)

Interested party contracts

By shareholders’ resolution

By shareholders’ resolution

By shareholders’ resolution

Auditor

Thresholds (2 out of 3):

Assets ≥ $ 2,230,000

Net T/O ≥ $ 4,460,000

Staff ≥ 50

Thresholds (2 out of 3):

Assets ≥ $ 1,440,000

Net T/O ≥ $ 2,880,000

Staff ≥ 20

Compulsory

Annual filing of accounts and AGM

Compulsory Compulsory Compulsory

Taxation

Company tax

unless wholly-owned by individual

Company tax

unless applicable limited exemptions

Company tax

For convenience, amounts are converted into Australian dollars

SARL SAS SA

Constitution Flexible Tailored Mostly statutory

Cost to set up and run Fairly inexpensive Fairly inexpensive Expensive

Restricted sale of shares Yes if in constitution Yes, if in constitution No

Joint venture Closely-held Closely-heldLarge number of shareholders

Corporate governance

Fairly protective depending on constitution

Depends on constitution

Protective

SNC SCAFull name Société en nom collectif Société en commandite par action

Equivalent in Australia Incorporated partnership

Incorporated partnership limited by shares

Members

Min. 2 partners

Individual

Corporate entities

Must be allowed to trade

Min. 1 limited shareholder

Min. 1 unlimited shareholder

Individual

Corporate entities

Liability of members Joint and unlimited

Limited shareholder: limited

Unlimited shareholder: joint and unlimited

Share capital requirement ≥ $ 1 ≥ $ 54,000

Contributions

Cash

Assets

Labour

Cash

Assets

Labour (for unlimited shareholders only)

For convenience, amounts are converted into Australian dollars

SNC SCA

Management One or more managersOne or more managers

Supervisory board

Legal requirements

Individual

Corporate entity

If manager is a partner, must be allowed to trade

Must be appointed in constitution

Individual

Corporate entity

If manager is a shareholder, must be allowed to trade

Must not be a limited shareholder

Joint venture Very closely-heldSilent investor: limited shareholder

Active local partner: unlimited shareholder

Auditor

Thresholds (2 out of 3):

Assets ≥ $ 2,230,000

Net T/O ≥ $ 4,460,000

Staff ≥ 50

Compulsory

Tax Shareholder direct taxation Hybrid taxation

For convenience, amounts are converted into Australian dollars

SNC SCA

Advantages

Unanimous consent for:• sale of shares• revocation of managing partner

Favourable taxation if activity expected to make loss

Flexible constitution

Liability proportional to responsibilities

Hybrid taxation

Good corporate governance depending on constitution

Good for a silent investor

Disadvantages

Unlimited liability of partners

Management deadlock

Difficult to leave partnership

Complex and expensive to manage

Hybrid taxation complex to administer

Unlimited liability for local partner

• Different legal system:Forget your assumptions

• Reporting:Ensure good communication

• Assets and goodwill:Protect your business

Véronique Morgan-Smith

Special Counsel Solicitor – NSW Avocat – FranceNAATI Translator

Practice areasCommercial and CorporateCorporate GovernanceMergers & AcquisitionsResources and EnergyIT

Sydney+61 (0) 423 191 723veronique.morgansmith@oceanie.com.au

Julie Miehe

PrincipalSolicitor - NSW & QLDJuriste – France

Practice areasCommercial and CorporateMergers & AcquisitionsCorporate GovernanceResources and EnergyTourism

Brisbane+61 (0) 423 298 007 julie.miehe@oceanie.com.au