Atlassian, Australia's startup darling, today had its scheme to move its shares and operations to the United Kingdom approved by the Australian Federal Court.
The court had ordered in mid January that the issue of redomiciliation be put to the vote of the software company's shareholders and option holders, pursuant to the Australian Corporations Act.
The meetings, held on January 29 in Sydney, were presided over by Atlassian co-CEO Scott Farquhar in the position of chairperson. Although counsel for Atlassian today admitted that attendance in person of shareholders and option holders was low at the vote, those present did constitute a quorum in accordance with the January decision.
With the majority of those attending in person or by proxy agreeing to the scheme, Justice Yates said on Tuesday morning that he was "satisfied that it is appropriate to make the orders in the form of the draft orders", and gave final acquiescence [Word doc] for the scheme to be approved.
Atlassian's shareholders will have their Australian shares substituted on a one-for-one basis with Atlassian UK shares. Atlassian UK was incorporated on November 14, 2013, for the purpose of the anticipated restructure, and Atlassian AU Holdco, incorporated on November 15, 2013, will be Atlassian's direct holding company.
Atlassian sought leave at the end of 2013 [Word doc] to move its head operations and shares to the UK, where it said it could more easily expand as an international company and also potentially make an initial public offering in the US.
In November 2012, Deloitte released a study revealing that only 4.7 percent of Sydney and Melbourne startups are successful. The major problems are the smaller financial ecosystem and less funding in Australia.
"I think the local tax laws are a struggle, and I think equity-raising laws are a struggle, too. I'd like to see more of the policy changes to make the startup scene better," Farquhar said in an interview with ZDNet in February last year.
"Most people, including myself, would recommend to startups to incorporate their companies overseas. I think the government can do a lot more with startups, and I'll keep pounding on that until we see some meaningful traction."
In January, Australian Communications Minister Malcolm Turnbull downplayed Atlassian's decision to relocate to the UK in a Facebook Q&A he conducted while visiting Facebook's headquarters in Menlo Park, California.
"That 'move' is rather exaggerated; it does not involve moving their team or their business there as it happens, more of a corporate move," he said.
However, he did admit that more should be done to boost startups in Australia.
"But you are right in saying we need to do more to encourage innovative companies in Australia, it is a keen matter of interest for me — an obvious area is rectifying the anomalous treatment of employee shares and options in [Australia]."
In order to research and emphasise the state of startups and venture capital within Australia, the Silicon Beach Action Group, headed by Google, was formed last year.
"Look at the venture capital industry in Australia. It is dead. Last year, the entire venture capital industry as a whole raised AU$40 million total across three funds," Freelancer CEO Matt Barrie said in March. Freelancer went on to list on the Australian Securities Exchange, and currently has a market cap in excess of AU$630 million.
"A company like Atlassian, for example — its last financing was $60 million. The entire Australian venture capital industry did not raise enough to even do that round in one company."
Turnbull also said in November last year that the government should review the way in which employee stock schemes are taxed.
"We should have an employee share scheme that is comparable to the regime, for example, in the United States. It's crazy not to, because otherwise, you're just creating another reason for people to start their business in America rather than here," he said.
Despite this, in December, Australia's Assistant Treasurer Arthur Sinodinos passed 37 tax and superannuation measures and dismissed 55, with the end result being increased pressure on startups and venture capital investors.
The measures dismissed by the assistant treasurer included a move for research and development tax credits to be made in quarterly instalments, and a scheme to encourage angel investors by lowering requirements for Early Stage Venture Capital Limited Partnerships from AU$10 million to AU$5 million.
"Abandoning these reforms is a major setback for Australia's innovation agenda," Australian Private Equity and Venture Capital Association Limited CEO Yasser El-Ansary said in a statement at the time.
"These reforms would not have a significant net cost to the Budget bottom line; in fact, these reforms would likely lead to more tax revenue over time as investment increases and businesses become more profitable more quickly."
Atlassian has customers in 134 countries and employs around 750 staff members worldwide.