(Since a change in the law effective 1 July 2003, you cannot incorporate a
company without disclosing whether or not the share(s) in the company will
be held 'beneficially' - per section
of the Corporations Act 2001.)
If the sole member/shareholder will be holding the share(s) simply for his or her own benefit, then he or she will be holding the share(s) 'beneficially', and thus will not be holding the share(s) 'on trust' for another person or entity. In this case, your answer to this question should be 'No'. This is by far the more usual and the more common situation.
If, however, the sole member/shareholder will not be holding the share(s) simply for his or her own benefit, but instead for the benefit of another person or entity, then he or she will be holding the share(s) 'non-beneficially' and thus 'on trust' for that other person or entity. In this case, your answer to this question should be 'Yes'. This is the less usual and the less common situation. An example would be where the sole member/shareholder is going to hold the share(s) for his or her family trust. (Further, in this case, the person holding the share(s) may be said to be the 'trustee' or the 'non-beneficial owner' or the 'mere registered holder' or the 'legal owner', whilst the person or entity on whose behalf he or she is holding the share(s) may be said to be the 'beneficiary' or 'beneficial owner' or the 'real owner' or the 'equitable owner'.)
You may also want to note that even if the share(s) will be held for the benefit of another person or entity (and thus you answer 'Yes' to this question), you will not be asked by Incorporator to disclose who that other person or entity is (unless that other 'person' or entity happens to be an 'ultimate holding company' in which case you will have to disclose its details ... but more about that after you 'Continue' to the next round of questioning in the process).
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