Corporate structure explained

Corporate structure is the arrangement of separate legal entities within a group of entities with a common ultimate controller. Corporate structures are often established on an ad hoc basis, sometimes without much consideration for the appropriate makeup of the group.

Each company within the corporate group is a separate and independent legal entity capable of incurring its own debts and having its own creditors. However, arrangements could be made that result in liability shifting between companies within the corporate group, sometimes deliberately, sometimes unintentionally. Further, there are provisions in the Corporations Act 2001 (Cth) under which the activities of one company within the corporate group have an impact on another company within the group.

When implementing an appropriate corporate structure, all aspects of the group’s business should be considered, including the nature of the assets, particularly intellectual property, and the nature of liabilities, particularly intra-group finance facilities.

See Corporate structure explained.