Becoming a director of a company?
A company registered in Australia needs to have a minimum number of directors and a secretary. If a company does not have enough officers, 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 obligations.
Corporations Act 2001
The Corporations Act requires that every Australian private company must have at least one director who “ordinarily resides in Australia”. Public companies must have at least 2 Australian resident directors. The term “ordinary resides” is not defined in the Act. Australian Securities and Investments Commission (ASIC) has not provided any guidance on what requirements must be satisfied for a director to meet this residency criterion. Therefore, the Court determines residency status of a director based on usual place of abode or where a person regularly or customarily lives.
Who can be a director
To be eligible to be a director of a company, you must:
- be at least 18 years of age
- consent to taking on the role and responsibilities of a director
Role and legal obligations of a director
Before becoming a director, you should fully understand your role and legal obligations regarding the management of the company.
If you are already a director, or are about to become a director, of a company that has employees, you should immediately find out if there are any Pay As You Go (PAYG) withholding or Superannuation Guarantee Charge (SGC) amounts that are owing to the Australian Taxation Office (ATO) by the company.
If you fail to meet a PAYG withholding or SGC liability by the due date, you may become personally liable for a penalty equal to the unpaid amount under the ATO’s Director Penalty Regime.
You may also, under certain circumstances, become personally liable for your actions as director and/or for the debts of the company.
Are you looking at forming a company? Our accountants and lawyers can take the stress away from the company formation process and handle the matter from start to finish. Contact us today to set up an appointment 02 9223 9166 or submit an online enquiry form today.