Commonwealth Numbered Acts

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CORPORATIONS ACT 2001 - SECT 1.5.5

Company directors and company secretaries

5.1 Who can be a director

Only an individual who is at least 18 years old can be a director. If a company has only 1 director, they must ordinarily reside in Australia. If a company has more than 1 director, at least 1 of the directors must ordinarily reside in Australia. A director must consent in writing to holding the position of director. The company must keep the consent and must notify ASIC of the appointment. In some circumstances, the Corporations Act imposes the duties and obligations of a director on a person who, although not formally appointed as a director of a company, nevertheless acts as a director or gives instructions to the formally appointed directors as to how they should act. The Court or ASIC may prohibit a person from being a director or from otherwise being involved in the management of a company if, for example, the person has breached the Corporations Act. A person needs the Court's permission to be a director if the person has been convicted of certain offences or is, in some circumstances, unable to pay their debts as they fall due. Generally, a director may resign by giving notice of the resignation to the company. The company must notify ASIC of a director's resignation. A director who resigns may also notify ASIC of the resignation.

[sections 60, 221, 222A, 224, 228—230, 242, 242C, 599, 600, 206C, 1317G, 1317EA(3)]

5.2 Appointment of new directors

It is a replaceable rule (see 1.6) that shareholders may appoint directors by resolution at a general meeting. [section 224C]

5.3 Duties and liabilities of directors

In managing the business of a company (see 1.7), each of its directors is subject to a wide range of duties under the Corporations Act and other laws. Some of the more important duties are: * to act in good faith * to act in the best interests of the company * to avoid conflicts between the interests of the company and the director's interests * to act honestly * to exercise care and diligence * to prevent the company trading while it is unable to pay its debts * if the company is being wound up—to report to the liquidator on the affairs of the company * if the company is being wound up—to help the liquidator (by, for example, giving to the liquidator any records of the company that the director has). A director who fails to perform their duties: * may be guilty of a criminal offence with a penalty of $200,000 or imprisonment for up to 5 years, or both; and * may contravene a civil penalty provision (and the Court may order the person to pay to the Commonwealth an amount of up to $200,000); and * may be personally liable to compensate the company or others for any loss or damage they suffer; and * may be prohibited from managing a company. A director's obligations may continue even after the company has been deregistered.

[Sections 180, 181, 182, 183, 184, 475, 530A, 588G, 596, 601AE, 601AH, 1317H]

5.4 Company secretaries

A company must have a company secretary. The directors appoint the company secretary. A company secretary must be at least 18 years old. If a company has only 1 company secretary, they must ordinarily reside in Australia. If a company has more than 1 company secretary, at least 1 of them must ordinarily reside in Australia. A company secretary must consent in writing to holding the position of company secretary. The company must keep the consent and must notify ASIC of the appointment. The same person may be both a director of a company and the company secretary. Generally, a company secretary may resign by giving written notice of the resignation to the company. The company must notify ASIC of a company secretary's resignation. A company secretary who resigns may also notify ASIC of the resignation. The company secretary is an officer of the company and, in that capacity, may be subject to the requirements imposed by the Corporations Act on company officers. The company secretary has specific responsibilities under the Corporations Act, including responsibility for ensuring that the company notifies ASIC about changes to the identities, names and addresses of the company's directors and company secretaries and that the company lodges its annual return. A company secretary's obligations may continue even after the company has been deregistered.

[sections 83, 142, 222A, 240, 242, 242C, 345, 601AD, 601AH]



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