A company director with a criminal record can usually still hold the role. A criminal record on its own does not disqualify you. What disqualifies you is a specific type of conviction: an offence involving dishonesty, a serious corporate or company-decision offence, or a sentence above certain thresholds set out in section 206B of the Corporations Act 2001 (Cth). Bankruptcy disqualifies you too, and most people forget that one.
If you are reading this, you are probably worried about one conviction, or you are about to appoint someone who has one. That fear is reasonable, and the internet makes it worse: half the answers say “it depends” and stop there. So let’s get past “it depends” and tell you exactly which convictions matter, for how long, and what you can do about it.
- A criminal record alone does not stop you being a director. Only certain convictions trigger automatic disqualification under section 206B of the Corporations Act.
- Dishonesty offences are the big trap. A dishonesty conviction punishable by 3 months or more in prison disqualifies you, even if you never go to jail.
- Bankruptcy disqualifies you too. An undischarged bankrupt cannot manage a company, regardless of any criminal history.
- The usual ban is 5 years. It runs from the conviction date, or from your release if you served time. A court can extend it by up to 15 more years on ASIC’s application.
- You can still run a business as a sole trader. Disqualification stops you managing a company, not trading under your own name, though a dishonesty conviction can also block a business name.
What disqualifies you from being a company director?
Disqualification is automatic for a defined set of triggers. You don’t get a letter, and ASIC doesn’t have to make a decision. The moment a trigger applies, you are disqualified from managing any corporation in Australia, and staying on as a director is itself an offence.
Section 206B of the Corporations Act sets out the criminal triggers. There are three, plus bankruptcy. Here is the plain-English version.
| Trigger | What it covers | The threshold that matters |
|---|---|---|
| Company-decision offences | An offence (convicted on indictment) tied to running a company: decisions affecting the whole or a substantial part of the business, or anything that can significantly affect the company’s financial standing. | Conviction on indictment (a serious charge heard in a higher court). |
| Corporations Act offences | Breaching the Corporations Act itself. There are over 100 offences in this category, listed in Schedule 3. | Punishable by more than 12 months in prison. |
| Dishonesty offences | Fraud, theft, obtaining a benefit by deception, and similar. “Dishonest” means dishonest by the standards of ordinary people. | Punishable by 3 months or more in prison, even if no prison is served. |
| Bankruptcy | Being an undischarged bankrupt, or having an unfulfilled personal insolvency agreement under the Bankruptcy Act. | Applies for as long as the bankruptcy or agreement runs. |
Notice the gap between the thresholds. A corporate offence has to carry more than 12 months. A dishonesty offence only has to carry 3 months. That low dishonesty threshold catches far more people than they expect, because it sweeps in most theft and fraud offences across Australia.
Why dishonesty offences catch people out
The dishonesty trigger is the one that surprises people. You do not need to have gone to prison. A suspended sentence counts. A fine instead of jail counts. What matters is the maximum penalty the offence could carry, not the sentence you actually received.
So a shoplifting charge dealt with by a small fine can still disqualify you, if the offence is one that could attract three months or more. ASIC spells this out plainly in its guidance on people who cannot hold a business name: the disqualification bites even where there is a suspended sentence or an alternative punishment. If your conviction sits anywhere near a dishonesty offence, get a lawyer to check the maximum penalty before you assume you are fine.
Bankruptcy: the disqualifier people forget
Plenty of people searching for the criminal-record answer are actually facing a money problem, not a criminal one. If you become bankrupt, you are disqualified from being a director the moment the bankruptcy starts. No conviction required. The ban lasts until you are discharged, which is usually three years and one day after you file.
This trips up sole directors hard. If you are the only director and you go bankrupt, the company is left with nobody who can lawfully run it. That is a real operational problem, and it needs a plan before the bankruptcy lands, not after.
How long does director disqualification last?
For a criminal conviction, the automatic ban is 5 years. The clock starts on the day you are convicted. If you serve a prison term, it starts on the day you are released instead. So a conviction from more than five years ago, with no jail time, will usually not disqualify you today.
That “15 years” figure you might have seen is not the automatic period. The 5 years is automatic. ASIC can apply to the court to extend that ban by up to a further 15 years where the conduct was serious enough. That extension is a separate court step, not something that happens on its own.
Bankruptcy works differently again. There is no fixed five-year rule. The disqualification simply lasts as long as you remain an undischarged bankrupt, so the relevant date is your discharge, not a conviction.
Do spent convictions still count against you?
Australia has a spent convictions scheme. Once enough time passes with no reoffending, an old, low-level conviction can become “spent” and drop off most criminal history checks. For Commonwealth offences that period is generally 10 years for adults.
Here is the practical reality, though. The 5-year automatic disqualification clock almost always runs out well before a conviction becomes spent. So by the time spent-conviction timeframes start to matter, the director ban has usually already lifted. The spent convictions question tends to come up in a different context: disclosure. If a bank, a licensing body, or a co-director runs a check, what shows up depends on whether the conviction is spent, and the scheme has exclusions where you still have to disclose. That is worth advice rather than guesswork.
What about a conviction from another country?
Overseas convictions count. If you were convicted of a foreign offence punishable by more than 12 months in prison, that triggers automatic disqualification here. The dishonesty and company-decision triggers reach foreign offences as well, so a foreign dishonesty offence with a 3-month-plus maximum can disqualify you even though it falls under the 12-month line.
If you have prior convictions from another country, or you are facing charges overseas while you hold or want a directorship in Australia, this is a point where a quick chat with a company lawyer saves a lot of stress. The mapping between a foreign offence and the Australian threshold is not always obvious.
Get your Consent to Act as Director legal document for free.
Can you own a business with a criminal record, even if you can’t be a director?
Yes, and this is the distinction that gets lost in most articles. Disqualification stops you managing a corporation. It does not stop you running a business as a sole trader. A felon, an undischarged bankrupt, a disqualified director: any of them can still operate as a sole trader trading under their own name or a registered business name.
There is one catch worth knowing. Bankruptcy and a disqualifying conviction are treated differently for business names. An undischarged bankrupt can still hold a business name and trade as a sole trader. But a disqualifying dishonesty conviction can also block you from holding a business name for the same 5-year period, not just from being a director. So the route back to trading depends on which trigger applies to you.
When a company structure is off the table for now, a sole trader setup is often the sensible interim move. You can always register a company later, once the disqualification period has passed or leave has been granted.
How do you become a director again after being disqualified?
Two routes exist, and which one applies depends on how you were disqualified.
If you were automatically disqualified by a conviction, you can apply to the court for leave to manage a company under section 206G of the Corporations Act. Be realistic: courts grant this sparingly, and you will need to show why letting you manage a company is appropriate despite the conviction. If ASIC was the body that disqualified you, the path back runs through ASIC’s permission rather than the court.
The simpler route, where it is available, is patience. The 5-year automatic ban lifts on its own. For bankruptcy, discharge lifts the disqualification. Neither needs a court application.
Check the ASIC banned and disqualified register first
Most people don’t know this exists. ASIC keeps a public, searchable register of people disqualified from managing corporations, called the banned and disqualified registers. Before you appoint someone, or before you assume your own status, search it by name. It costs nothing and takes a minute. If you are appointing a director and that person has a history they have not mentioned, the register is where you find out.
One more practical point: every director now needs a director identification number. Applying for a director ID does not “clear” a disqualification, and holding one does not override a ban. If you are disqualified, the director ID system is not a workaround.
What we see in Lawpath consultations
The statute is the easy part. Where founders actually come unstuck is in the practical gaps around it. A few patterns come up again and again across Lawpath consultations.
The “co-director” who was never registered. A sole director who could see a personal bankruptcy coming wanted the company to keep running without them. The plan was sound: get a second director onto the company before the bankruptcy hit. The problem was that the second person had been named on paperwork but the appointment was never actually lodged with ASIC. On the register, the company still had one director, who was about to be disqualified. Lawpath lawyers see this often. Relying on a backup director? Confirm they are recorded on the ASIC register, not just mentioned in a document. Our guide on how to add a director to your company covers the lodgement step people skip, and it is worth checking your company constitution template allows a sole director to keep operating.
Trying to stay in charge quietly. Another recurring question is whether a disqualified person can keep running things informally while someone else is the “official” director. They can’t. The Corporations Act’s definition of director catches shadow and de facto directors, so a person who keeps making the real decisions is still managing the company, and still breaching the ban. The informal workaround is the fast way to turn a five-year problem into a much worse one.
Spent versus unspent matters more than age. In consultations about regulator “fit and proper person” checks, the deciding factor is usually whether a conviction is spent or unspent and whether the matter is fully finalised, not just that it happened a long time ago. A finalised matter with no outstanding charges reads very differently to an open one. If you are disclosing history to a regulator, lead with what is finalised and spent.
Disqualification cuts both ways. Directors come to us as creditors too, asking how to deal with a supplier or business partner who has burned them. One avenue, where a company can’t pay its debts, is seeking to have it wound up and its director disqualified. Worth remembering that disqualification is not only a criminal-record issue. It is also a tool the system uses against directors who run companies into the ground.
Frequently asked questions
Can you be a company director with a criminal record?
Usually, yes. A criminal record alone does not disqualify you. You are only disqualified if you have a specific kind of conviction: a dishonesty offence punishable by 3 months or more, a serious company-related or Corporations Act offence, or a foreign offence above the relevant threshold. Bankruptcy also disqualifies you.
What disqualifies you from being a company director?
Four main things under section 206B: a conviction for a dishonesty offence carrying 3 months or more, a corporate or company-decision offence, a Corporations Act offence carrying more than 12 months, and being an undischarged bankrupt. Court orders and ASIC banning orders can also disqualify you.
Does a conviction without jail time still disqualify me?
It can. For dishonesty offences, what matters is the maximum penalty the offence carries, not the sentence you got. A suspended sentence or a fine still counts if the offence is punishable by 3 months or more. This is the single most common misunderstanding.
How long does disqualification last after a conviction?
Five years. It starts on the conviction date, or on your release date if you served a prison term. ASIC can apply to the court to extend it by up to 15 more years in serious cases, but the automatic period is five years.
Can you own a business with a criminal record?
Yes. Disqualification stops you managing a company, not running a business as a sole trader. You can trade under your own name or a business name. The exception is that a disqualifying dishonesty conviction can also block a business name for five years, so the answer depends on your specific trigger.
Can a felon own a business in Australia?
Yes. Having served time does not stop you owning or running a business as a sole trader. It may stop you being a company director for five years if the conviction was a disqualifying one. Sole trader trading is the usual interim option while a director ban runs.
Does bankruptcy stop me being a director?
Yes. An undischarged bankrupt is automatically disqualified from managing a company. The ban lasts until you are discharged, usually three years and one day after filing. Bankruptcy does not, however, stop you trading as a sole trader.
How do I check if someone is a disqualified director?
Search ASIC’s banned and disqualified registers by name. It is free and public. Do this before appointing any new director, especially if you don’t know their full history. It is the quickest way to avoid appointing someone who legally can’t act.
Can a disqualified person manage a company informally?
No. The law catches shadow and de facto directors, so a disqualified person who keeps making the real decisions is still breaching the ban, even with someone else listed as the official director. Acting while disqualified is a serious offence.
Do I have to disclose a criminal record to become a director?
There is no general public disclosure form, but you must not act as a director if you are disqualified, and you must tell ASIC if you become disqualified while holding a role. Co-directors, banks, and licensing bodies may run their own checks, so honesty upfront usually beats a surprise later.
You’re not stuck. Here’s the next step.
For most people, the answer is reassuring. One old conviction, no jail, nothing to do with dishonesty or a company, and more than five years ago: you are very likely fine to be a director. The cases that need real care are dishonesty offences, recent convictions, current bankruptcy, and anything where you are not sure of the maximum penalty.
Got one of those? Get it checked properly before you sign anything. A short conversation with a criminal lawyer or company lawyer on Lawpath gives you a clear answer for a fixed fee, instead of guessing. Sort it once, and get back to building the business.
