Business

Can A Non-Australian Citizen Be A Company Director?

Have you ever wondered whether a non-Australian citizen can be a director of a company? 

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:

  1. A director must be at least 18 years of age
  2. A director must consent in writing to take on the role and responsibilities of a director
  3. Where a company only has one director, the director is required to ordinarily reside in Australia
  4. At least one of a company’s directors must ordinarily reside in Australia, where the company has more than one director 

According to Section 201A of the Corporations Act for private companies, there must be at least 1 director, and they must ordinarily reside in Australia.

A public company must have at least three directors, two of which 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.

Criteria For A Permanent Person or Non-Resident

The number of directors an Australian company can have depends on whether it’s a proprietary company (has ‘Pty Ltd in its name) or a public company ( that doesn’t have ‘Pty’ in its name). 

For proprietary companies, they must have at least one director residing in Australia. Non-Australian residents can be appointed if more directors are needed.

In contrast, public companies must have a minimum of three directors, with at least two of the directors being residents of Australia. Here, a non-Australian resident can also be one of the three company directors.

Ultimately, a foreign person must establish ‘ordinary residence’ or Australian residency and must be personally present or ordinarily resident to be appointed a director. Furthermore, there has to be a degree of permanence in the person’s residence. 

Therefore, in some circumstances, a company may appoint one or several foreign directors depending on the type of company and if they meet the above requirements.

You should also know that some people may have dual residency that authorises them to have an ordinary residence in more than one country at the same time.

Key Points

  1. 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.
  2. A director must be at least 18 years old.
  3. A person must consent to become a director.
  4. 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 private company, as long as one Australian citizen is on the board, then non-Australian citizens can be added on a needs basis. For a public company, non-Australian citizens can be on the board as long as two Australian citizens are already sitting. The non-citizen can be appointed as the third director to meet the minimum legal requirement for three board sitting members.

Furthermore, non-Australian citizens have to meet two criteria to establish some sort of “permanency” to their stay. These criteria are listed below: 

  1. “Ordinary Residence” or Australian Residency
  2. Be personally present or ordinarily resident within Australia

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 company, legal consequences can arise, which can negatively affect the company. 

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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