A few things you need to know about a Resident Director

According to the Corporations Act 2001, there are certain duties and obligations that the company directors must adhere to. With the responsibility to take care of different business aspects, they are an important asset of a company, and hold a special position.

How is a permanent resident different from a non-resident?

A permanent resident is the one having a valid visa to reside in Australia indefinitely, and is eligible to apply for Australian citizenship after a certain period of time. On the contrary, a non-resident is an individual who doesn’t have a valid visa or Australian citizenship.

For someone to prove that he is a resident of Australia, it is important for him to show that he lives in a particular place and follows a particular mode of life. Of course a person can travel to other places, but that should be on temporary basis. The decision to choose a place to live and settle down there should be his or her own.

Residency plays a crucial role when in comes to determining where an individual pays his tax. This brings the fact into light that some people choose to stay at a place where the tax rates are low and the rules are lesser in number.

Can you hire a non-resident as your company director?

When it comes to choosing a non-resident as a company’s director, the choice depends on the type of company which intends to bring a director on board.

It is necessary for all proprietary companies to choose someone who is a resident of Australia as their director. However, if a permanent resident is company’s director in Australia, and he decides to hire more directors, the other directors can be non-citizens, they need not necessarily be resident directors.

Public companies are required to hire a minimum of three company directors, two of them must be residents of Australia. A permanent resident can thus play the role of a director for such companies. As far as third director is concerned, he can be a non-resident director.

For anyone to perform the role of a company director, it is important to be at least 18 years of age. However, there are certain rules as to who cannot be a director of a company in Australia, including the following:

  • Undischarged bankrupts
  • Individuals who have entered into a personal insolvency agreement according to the Bankruptcy Act 1966, and have failed to adhere to the terms and conditions of that agreement.
  • The Australian Securities and Investment Commission (ASIC) and the court hold the right to ban people from becoming a director for as long as they decide, and those banned by them are not applicable for becoming a company director.
  • Individuals found guilty of being dishonest in different cases.

  • It is up to the regulators to control who can be a director and who cannot. They also formulate certain rules on residency to protect shareholders and the office of directors as well as institution of companies.

    If there are no rules on residency, a non-resident or non-citizen director might part ways with the Australian legal system. This is when they cannot be held responsible for their actions.

    The rules and regulations concerning the appointment of a resident director explain the need to protect the responsibilities related to the position. If you are opening up a company in Australia, be careful while choosing your resident director. It is advisable to seek a professional who can provide reliable resident director services Australia, and help your business grow and expand.

    Jan 20 2017