What Is An Alternate Director?
An alternate director is like a substitute for the director. A director of a company may appoint an individual to act as an alternate director for a set period of time. It isn’t always common for large businesses but is useful for small businesses or joint ventures. This allows directors can appoint an alternate director if they plan to be absent or missing from board meetings or other events they would like their powers executed.
The Corporations Act covers the rules regarding alternate directors. At law, alternate directors have the same powers, duties and responsibilities as directors and therefore companies must consider whether this is necessary and appropriate. However, the director has the authority to limit or expand their powers and responsibilities depending on the terms of their appointment. Section 201K of the Corporations Act also stipulates some organisations may replace these rules with the company’s constitution. If you are looking to appoint an alternate director there are certain steps you must comply with to ensure the appointment meets the legal requirements prescribed by the Australian Securities and Investments Commission (ASIC).
For small businesses with sole directors it is important an alternate director be considered in the unforeseen event of physical incapacity, mental illness or death. This is because an enduring power of attorney cannot just take on the director’s duties as they are only authorised to make decisions about the individual’s personal affairs and not the company’s. Appointing an alternate director means that this time delay can be avoided as if anything was to happen to the director and allows the day to day running of the company to continue seamlessly.
Are you unsure of whether you need to appoint an alternate director? LawPath can connect you with an experienced lawyer from our Lawyer Directory!
Ready to register a company or have other business legal questions? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 700+ expert lawyers or to get answers to your legal questions.