Have you ever wondered whether a non-Australian citizen can be a director of a company?
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Appointing a non-Australian citizen to be a company director allows you to have great influence over the growth and operation of your Australian business on an international scale.
Typically, a company may have one director or multiple directors sitting on its board of directors. But with great power comes great responsibility. All directors have duties and obligations that require them to be responsible for managing their company’s affairs.
If you intend to be a director as a non-Australian citizen or if you’re planning to bring a director on board who’s a non-Australian citizen, this article is a must-read. We explain the rules that surround the process of appointing a director, and then it’ll explain whether a non-Australian citizen can be a company director.
Read along!
Who Can Be A Director?
A company director is defined in Section 9 of the Corporations Act 2001 (Cth) as a person who’s appointed to the position of director. Generally, there are no restrictions on who a company director can be.
However, a court or the Australian Securities & Investments Commission (ASIC) can prevent an individual from becoming a company director due to previous offences or if they have breached the Corporations Act. Any Australian adult is eligible to be a director. However, there are multiple legal requirements outlined by section 1.5.5 of the Corporations Act regarding the appointment of company directors:
- A director must be at least 18 years of age
- A director must consent in writing to take on the role and responsibilities of a director
- Where a company only has one director, the director is required to ordinarily reside in Australia
- At least one of a company’s directors must ordinarily reside in Australia, where the company has more than one director
A director can also be ineligible if they fall under the disqualification criteria outlined in section 206B of the Corporations Act.
According to Section 201A of the Corporations Act for private companies, there must be at least one director, and they must ordinarily reside in Australia.
In contrast, non-Australian residents (otherwise known as foreign residents) don’t hold a permanent visa (such as a student visa) or Australian citizenship.
The duties and responsibilities of a director can be imposed on an individual who isn’t formally appointed as a company director where they act in that capacity, or they provide instructions to directors who are formally appointed in regards to their duties.
So yes, someone who is not an Australian citizen can be an Australian director.
Criteria For A Permanent Resident or Non-Citizen
Proprietary companies must have at least one director ordinarily residing in Australia. Any further directors may be Australian or non-Australian residents.
Whether a person ordinarily resides in Australia or not is a matter of fact that courts will establish based on a range of factors, of which citizenship (or lack thereof) is only one. These include, among others:
- How permanently the individual stays in Australia, particularly in comparison with other placesE the individual visits.
- The place where the individual’s ordinary life takes place.
- Where the individual owns or leases property that they live in.
- Where they individual has employment arrangements.
An individual may ordinarily reside in more than one country.
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Key Points
- 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 ASIC’s webpage on who can be a company director.
- A director must be at least 18 years old.
- A person must consent to become 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.
Duties
As a director, you must continuously act in the best interests of the company. If you’re a director of a business with shareholders, you must primarily act in the best interests of shareholders. The Corporations Act 2001 (Cth) governs these obligations. Key duties include that you must:
- Avoid making decisions that prioritise your own interests over the company’s.
- Remain informed on your company’s financial position and make appropriate decisions based on this position.
- Not use any information to gain a personal advantage within the company.
- Be open to the advice from those around you and ask for help when necessary as you aren’t running the company on your own.
- Handle company assets appropriately. This means you can’t 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 proprietary company, as long as one person who ordinarily resides in Australia is on the board, then non-Australian citizens can be added on a needs basis.
Conclusion
To summarise, yes, a non-Australian citizen can be a company director. Before you can become a company director, it’s important that you check that you’re complying with all the rules and regulations associated. If you fail to comply, legal consequences can arise, which can negatively affect the company.
Lawpath offers a resident director service, where we will provide a professional to act as a director ordinarily resident in Australia so that your company can comply with this requirement.
If you’re still feeling unsure about your legal obligations as a company director, you should hire a lawyer for legal advice.
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