Does an Australian company need a resident director? FAQs to answer those tricky questions.
One of the most important and confusing aspects to setting up business in Australia is choosing a nominee director, also known as a resident director in Australia. The regulations in Australia that apply to who can be a resident director and their role may be different to foreign company regulations.
These FAQs based on Australian resident directors attempts to answer all your questions to clear up any confusion you may have –
What is a nominee director?
The nominee director of an Australian company is a person who is responsible for managing the company’s business activities.
As a nominee director, there are legal obligations you must comply with under the Corporations Act 2001. You can appoint an agent, for instance Abdera offers its clients resident director services, to look after your company’s matters and ensure compliance.
Does an Australian company need a resident director?
Yes. If the company is a proprietary company (with ‘Pty’ in its name) – it must have at least one director, who must ordinarily reside in Australia.
If the company is a public company (with shareholders), it must have a minimum of three directors, at least two of whom must ordinarily reside in Australia. For example, two directors can be permanent residents and the third can be a non-citizen.
In the circumstances that your company does not have a suitable nor eligible nominee director, you can nominate a third party such as Abdera and utilise their resident director services. These services provide an accredited nominee as resident director, maintaining your company’s regulatory and compliance duties but does not have business controls.
Who can be a nominee director?
To be eligible to be a director of a company, you must:
- be at least 18 years of age
- consent to taking on the role and responsibilities of a director.
- must ‘ordinarily’ reside in Australia.
- must obtain a director identification number (DIN) https://www.abdera.com.au/director-identification-number-and-why-you-need-one/
Do you have to be an Australian citizen to be a resident director of a company?
No, there are exceptions, but the main criteria is that you must be able to prove that Australia is your main place of residence.
Can a permanent resident be a resident director?
Yes, if Australia is their main place of residence. This includes a continuous, settled life in Australia (with only short absences) and they pay personal tax in Australia.
A permanent resident has a valid visa to remain in Australia indefinitely.
Can a temporary resident be a resident director?
This depends, as other factors in addition to living in Australia are taken in to consideration.
Please contact Abdera and we would be happy to check your status.
Who cannot be a company director?
Certain types of people are not eligible to be a director of a company. You cannot be a director if you:
- are an undischarged bankrupt
- have entered into a personal insolvency agreement under the Bankruptcy Act 1966and failed to fully comply with the terms of that agreement
- have been banned by ASIC or a court from managing corporations under the Corporations Act 2001(the length of the banning period will be set by ASIC or the court)
- have been convicted of various dishonesty related offences, such as fraud. You will be automatically banned for five years from the date of the conviction or, if you are imprisoned, for five years from the date of your release.
How are company directors appointed?
If you decide to become a resident director of an Australian company, before you are appointed officially, you must forward a written consent to the company.
This written consent must be filed with company documents and any changes to directors updated with ASIC.
What are your obligations to becoming a resident director?
Before you consent to becoming a director, your role and legal obligations of managing the company should be carefully considered.
As a resident director you are in a position and required to actively participate in company affairs, and to not contravene the Act. Foreign directors are expected to have a sound knowledge of the duties and obligations required of directors of Australian companies under the Corporations Act.
What is the role of the director?
A nominee director is required to have a good knowledge of the business’ activities and should include the following from the ASIC website –
- be honest and careful in dealing with the company and on its behalf with others
- understand your legal obligations and make compliance with them part of your business
- keep informed about your company’s financial position and performance, ensuring your company can pay its debts on time and keeps proper financial records
- give the interests of the company, its shareholders and its creditors top priority, which includes acting in the company’s best interests (even if this may not be in your own interests)
- use information you get through your position properly and in the best interests of the company
- get professional advice or more information if you are in doubt.
As a director, you must be fully up-to-date on what your company is doing. You should:
- find out and assess for yourself how any proposed action will affect your company’s business performance, especially if it involves a lot of the company’s money
- get outside professional advice when you need more details to make an informed decision
- question managers and staff about how the business is going
- take an active part in directors’ meetings.
You should only agree to become a company director or secretary if you are willing, able and have enough time to put in the effort.
Have we answered all your questions about Australian nominee director?
If you need more help, please call us on +61 2 8916 6259 or contact us and we can go through our resident director services to get your business started and compliant.
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