Can A Non-Australian Citizen Be A Company Director? (2021 Update)
Find out whether Australia’s rules and regulations prohibit a non-Australian resident from being appointed as a company director.
Appointing a non-Australian citizen to be a company director allows you to have great influence over the growth and operation of your business on an international scale. Typically, a company may have one director or multiple directors sitting on a board. But with great power comes great responsibility. All directors have duties and obligations that hold them responsible for managing the company’s affairs.
This article will be useful for you if you intend to be a director as a non-Australian citizen, or are planning to bring on a board director who is non-Australian citizen. But first, we must understand the rules which surround this process before we can understand if a non-Australian citizen can be a company director.
Who Can Be A Director?
A company director is defined in Section 9 of the Corporations Act 2001 (Cth) as someone ‘who is appointed to the position of director’. Generally, there are no restrictions on who can be a company director. Unless banned for previous offences, any Australian adult is eligible to be a director. However, there are two legal requirements relevant to the appointment of company directors:
- A director must be at least 18 years of age; and
- A director must consent to taking on the role and responsibilities of a director.
For proprietary companies, there must be at least 1 director and they must ordinarily reside in Australia. For a public company, there must be at least 3 directors, two of which must ordinarily reside in Australia.
In contrast, non-Australian residents (otherwise known as foreign residents) do not hold a permanent visa (such as a student visa) nor an Australian citizenship.
Criteria For A Permanent Person or Non-Resident
The number of directors a company can have depends on whether it is a proprietary company (has ‘Pty’ in its name) or a public company (does not have ‘Pty’ in its name). For proprietary companies, they must have at least one director residing in Australia. Non-Australian residents can be appointed if more directors are needed. In contrast, public companies must have a minimum of three directors with at least two residing in Australia. Here, a non-Australian resident can also be one of the three who is eligible to be a company director.
Ultimately, a foreign person must establish ‘ordinary residence’ or Australian residency and must be personally present or ordinarily resident to be appointed a director. More so, there has to be a degree of permanence of the person’s residence. Therefore, in some circumstances, a company may appoint one or several foreign directors depending on the type of company and if they meet the above requirements.
Be aware some people may have dual residency that authorises them to have ordinary residence in more than one country at the same time.
- Not just anyone can be a director. There are types of people who are not eligible to direct a company. For a comprehensive list, check out Australian Securities and Investments Commission’s Who Can Be A Director.
- A director must be at least 18 years of old.
- A person must consent to becoming a director.
- Non-Australian residents can be directors. But this depends on the type of company and the number of directors the company has residing in Australia.
As a director, you must continuously act in the best interests of the company. Remember, particularly in businesses with shareholders, you must act in their best interests primarily. The Corporations Act 2001 (Cth) governs these obligations. Key obligations include that you must:
- Not make decisions that prioritise your own interest over the company.
- Remain informed on your company’s financial position and make accordingly appropriate decisions.
- Not use any information to inappropriately gain a personal advantage within the company.
- Be open to the advice of those around you and take on help when necessary; you aren’t running the company on your own.
- Handle company assets appropriately. This means you cannot treat them as if they are your own and handle debt appropriately to avoid insolvency.
So, can a non-Australian citizen be a company director?
Yes, a non-Australian citizen can be a company director. For a private company, as long as one Australian citizen is on the board, then non-Australian citizens can be added on a needs basis. For a public company, non-Australian citizens can be on the board as long as two Australian citizens are already sitting. The non-citizen can be appointed as the third director to meet the minimum legal requirement for three sitting board members.
Further, non-Australian citizens have to meet two criteria to establish some sort of “permanency” to their stay. These criteria are listed below:
- “Ordinary Residence” or Australian Residency
- Be personally present or ordinarily resident within Australia
To surmise, yes, a non-Australian citizen can be a company director. Before you can be a company director, it is important that you check that all the rules and regulations are being complied with. Otherwise, legal problems can arise, which can negatively affect the company.
Are you unsure of your obligations as a company director? Our online lawyer marketplace can connect you with an experienced business lawyer.
Fiona is a Paralegal working in our content team which aims to provide free legal guides to facilitate public access to legal resources. With an interest in information, media, consumer and employment law, her primary focus is on how technology will affect the future of the legal industry.