What is an Australian Resident Director and why do you need one?

Resident director australia surfing

 

According to the Corporations Act (2001), all companies in Australia, both public (ending with “Ltd” or “Limited”) or private (ending in “Pty Ltd”) require one or more directors who “ordinarily reside in Australia” (Resident Director).

Private Companies require a minimum of one director, and at least one who must be a Resident Director (s201A(1)).  There is no requirement for a Company Secretary in a private company, though if one has been appointed, they must also be a resident of Australia (s204A(1)).

Public Companies require a minimum of three directors, two of which must ordinarily reside in Australia (s201A(2)).  Public companies are also required to appoint at least one Company Secretary, who must reside in Australia (s204A(2)).

What are the consequences?

If a company doesn’t have the requisite number of resident directors, it will be in breach of the Corporations Act (2001). This could result in the company paying penalties or being prosecuted for not meeting its statutory obligations.

Do you “ordinarily reside in Australia”?

“Ordinarily resides” is not a concept defined by the Corporations Act (2001) and ASIC has not provided guidance on what constitutes a resident of Australia. This interesting article from McMahon Clarke may provide some insight using other pieces of Australian legislation.

Registered Office

In addition to the Resident Director requirements, both public and private companies require a Registered Office address in Australia (s142) so that Australia’s corporate regulator, ASIC, can send important company documents to that address. It is also usually where the company’s Corporate Register resides, a file containing certain documents required by the Corporations Act 2001.  The Registered Office address can be a different address to the principal place of business.

If you have any questions, please contact us or tweet us at @CosecConsulting.