Becoming a company director allows you to play an important role in the growth and operation of the business. Typically, a company may have one director or a board directors. Regardless of the number of directors a company has, all directors have duties and obligations under the law that hold them responsible for managing the company’s affairs. Before you understand the legal consequences of failing to adhere to these rules and regulations, you must firstly familiarise yourself with criteria a person must meet in order to be appointed as company director.
A permanent resident isn’t automatically elgibile or ineligible to be a company director. These criteria will determine whether a permanent resident can be a company director.
What Is A Company Director?
The definition of corporate terms can be found in the principal legislation regulating companies in Australia, the Corporations Act 2001 (Cth). Section 9 of this Act defines a company director as ‘a person who is appointed to the position of director’.
Who Can Be A Director?
ompany 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, a permanent resident can be appointed as director of an Australian company.
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.
Key Take-Homes
- Not just anyone can be a director. There are types of people who are deemed not eligible to be a director of 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.
- Permanent residents can be appointed director.
- In any event, proprietary companies can have at least one director who ordinarily resides in Australia.
Conclusion
Before a person is appointed as a company director, it is important a decision is made after considering the rules and regulations. Otherwise, legal problems 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. Ready for registration? Get a head start and check out our range of Company Registration packages for a cost-effective and efficient way to make your business happen.
If you’re feeling unsure about your legal obligations as a company director, you should hire a lawyer for legal advice.
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