What’s the Difference Between Company Officeholders and Directors?
What is a company officeholder and what is a company director? In this article we explain the difference between these important roles.
All Australian companies are required to have a certain number of company officeholders and directors. Officeholders have responsibility for the day-to-day operations of the company. Directors have responsibility for overseeing the management and running of the company. However, all company directors are also officeholders. This means that the duties and responsibilites of directors include those of company officeholders. For more information about the specific duties of company officeholders and directors, read our article “Duties of Directors and Officers“.
Who Are Company Officeholders?
A company officeholder, also called a company officer, is responsible for many aspects of running a company. The Corporations Act 2001 (Cth) (‘Corporations Act‘) defines the term company officer. All directors and secretaries of a company are company officers. Company officers include people who can make decisions affecting the whole company or a significant part of it. They also include people who can significantly affect the financial standing of the company. For example the CEO, COO, CFO and other senior staff are usually company officers. Recievers, administrators, liquidators and trustees are also company officers.
Company officers are responsible for the day-to-day operations of the business. The company by-laws set out the specific duties and obligations of company officers. The company by-laws are the rules which govern how the company is to be run. The main responsibilities of officers are to ensure the effective operation of the business. The by-laws can also set more specific duties for each officer. Company officers also have general duties and responsibilities under the Corporations Act. These apply regardless of whether they are included in the by-laws. These duties include acting with due care and diligence and in good faith for the best interests of the company.
If a dispute arises about whether a company officer has complied with their duties the courts will look at a wide array of factors. Because this is a complex area of law, it is important to speak with a company lawyer if you have any concerns about the duties of company officers.
Who Are Company Directors?
Company directors are responsible for overseeing and managing the company’s business activities. They are responsible for the appropriate management and running of the company. Directors owe their primary obligations to the company’s shareholders or members. This means that when overseeing the running and management of the company, directors need to keep the interests of shareholders or members at front of mind. Specific rules exist to ensure that directors act in the interests of the shareholders or members. For example, directors must not use their position, or information they have access to, to gain an improper advantage for themselves or others. They also must not act in a way that causes detriment to the company.
Company directors need to acknowledge in writing that they consent to becoming a director. This consent will often be given by signing a “Consent to Act as a Director” document. This document should state the obligations and duties of the director so that they understand what is required. By asking a director to sign this document, the company can ensure that the director is fully aware of the responsibilities and duties of the role.
While company officers are responsible for the day-to-day operations of the company, directors are responsible for overseeing these operations. Directors are responsible for the high-level management of the companies activities. However, all company directors are also officers by default. This means that the duties of directors include those of company officers. However, the duties of directors are broader than those of non-director officers. There can be significant penalties for company directors and officeholders who do not uphold their duties and obligations. This means that it is very important for company directors and officeholders to understand the duties and obligations of their role.
Eamon is a legal intern at Lawpath. He is completing a Bachelor of Laws with a Bachelor of Environmental Management at Macquarie University. He is interested in disruption in the legal industry through the use of innovative technology.