Australia is one of the world’s most popular countries for business investment and expansion. The reasons are clear – a strong economy, low corruption, a skilled workforce and excellent infrastructure. But for foreign investors looking to establish a corporate presence, setting up an overseas business in Australia comes with a unique set of challenges.

One of the most important things to consider for international businesses expanding to Australia is the requirement to appoint a resident director (if your chosen business structure is a company). This law is in place to ensure international companies operating in Australia are accountable to Australian regulators and shareholders and the people they do business with.

The appointment of an Australian resident director is a legal requirement. However, it also provides a number of benefits for businesses. Resident directors bring local knowledge and insight into the Australian market. This can be invaluable for foreign businesses looking to expand their Australian operations.

In this article, we’ll look at the role of resident directors and how they can benefit your business.

What is an Australian resident director in Australia?

Australian resident directors are people appointed to represent a foreign-owned subsidiary company in Australia. The subsidiary is an Australian company owned by a foreign parent company. The Australian resident director provides an Australian point of contact for people and companies in Australia that do business with it. They may also manage and oversee the affairs of the Australian company on behalf of its foreign-resident directors and foreign-owned  shareholders.

A resident director is someone who makes sure the Australian entity follows all the laws and regulations and operates in a way that is consistent with its goal.

According to the Corporations Act 2001, a proprietary company in Australia must appoint at least one director, and at least one director must be an Australian citizen or permanent resident.

An Australian resident director must also meet the following conditions:

  • Be at least 18 years old
  • Not have been convicted of an indictable offence in the past five years
  • Have their principal place of residence in Australia
  • Produce a written consent to taking on a director’s responsibilities

The steps to incorporate a public company in Australia are more stringent. Public companies are required to nominate at least two Australian resident directors. The third appointed director can be a non-resident.

What are the legal responsibilities of a resident director?

The role of the resident director is to maintain compliance with the Corporations Act 2001. They also act as a point of contact on behalf of the Board of directors between the Australian corporation and regulatory authorities and the people doing business with it.

The resident director also ensures the company complies with all relevant Australian legislation. This includes ensuring the company keeps accurate financial records and making sure the company does not engage in any illegal activity.

The resident director also has a duty to promote the interests of the company and its shareholders. This may include representing the company at meetings.
It may also involve communicating with shareholders and acting in the company’s best interests.

Do Australian companies need a resident director?

Yes, public and private companies must have an Australian resident serving as at least one or two of their company directors. (depending on whether it is a private or public company) This is stipulated in section 201A of the Corporation Act 2001.

There are several ways in which you can find suitable resident directors for your company. One option is to use professional resident director services. Resident director service companies provide people who meet the eligibility criteria. Those individuals can be appointed to your company. (We offer this service, so please contact us if you need a professional resident director.)

Another option is to find someone who meets the criteria and is willing to act as your resident director. This person could be a friend or family member. Or they could be somebody whom you have met through business networking or a local Australian employee. Once you have found a suitable person, you will need to have them sign a director’s declaration form.

If you are appointing a firm like ours that offers resident director services, the firm will usually provide you with the necessary forms and documents at the time you are setting up your Australian subsidiary. If you are appointing an individual, you can obtain the forms from the Australian Securities and Investments Commission (ASIC). These will need to be provided at the same time as you seek to set up your company.

You cannot set up a new company in Australia without a resident director. So you will need to appoint someone before you start the process of setting up your Australian company. Once your company has been registered, the resident director will be listed on the public record of directors with ASIC.

Can a non-resident be the director of an Australian company?

Yes, non-residents of Australia can be directors of Australian companies. The Corporations Act 2001 (Cth) doesn’t prohibit foreign residents from being directors of an Australian company. However, section 601DA of the Act requires at least one of the company directors to be a resident of Australia.

How much does it cost to hire a resident director?

The cost of hiring a resident director varies depending on the company’s individual needs and requirements. Usually, it is structured as an annual or monthly fee payable to the resident director. If you contact us, we can give you information specific to your circumstances.

What happens if a company has no resident directors?

A company with no resident directors may be subject to fines or penalties. If foreign companies breach this requirement, ASIC may take action against the company and its directors. This could include cancelling the registration of the overseas company. ASIC could also take civil action against each of the directors personally for breach of their director’s duties.

What are the benefits of hiring an Australian resident director?

There are many benefits to appointing a resident director for an international business in Australia. Some of these benefits include:

  • Complying with the Corporations Act 2001. The Act requires all companies to have at least one director who resides in Australia
  • Having a director who is familiar with the local business environment, someone who can provide valuable insights and advice to a foreign company
  • Having someone on the ground who can represent the company in meetings and other events
  • Freeing up time for the company’s executives who may be based overseas

Appointing a resident director can also help a new company build trust with potential partners, investors and stakeholders. Having a presence in Australia shows that you are committed to doing business here and willing to invest in the local market.

Professional resident director services at your doorstep

This post gives you a general view of the role of a resident director. However, the situation can change at any time. You should not, therefore, rely on this article as specific to your situation, current or exhaustive. Also, downloading or reading this doesn’t create a solicitor and client relationship. Instead, we welcome the chance to talk to you to see if forming that relationship would be appropriate in your situation. We provide resident director services that can help your new company comply with Australian regulations.

Our resident directors are professional lawyers with an intimate understanding of the Corporations Act 2001. They can provide expert guidance on all aspects of company compliance. We can also assist with administrative work, providing peace of mind that your business is meeting its obligations.

We also offer additional services that will help you navigate the regulatory landscape and ensure that your business is operating smoothly and efficiently.

To have an introductory conversation, please contact us today and let us know how we can be of service in helping you establish an overseas business in Australia.

About Fiona Henderson

Fiona Henderson is an experienced Australian lawyer specialising in establishing business operations in Australia for overseas companies, as well as litigation and dispute resolution matters. Fiona’s advice is highly regarded by growing businesses in the USA, Germany, Austria, Switzerland, Norway, Italy and elsewhere who need an experienced lawyer and advisor to represent their interests in Australia. She regularly acts as their Australian resident director.

The Australian legal system is distinct from the legal systems many of her clients are accustomed to, which is why clients appreciate Fiona’s ability to anticipate and explain the sometimes surprising differences.

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