Resigning or removing a company director

Generally, when you resign or retire or are removed as a director of an Australian company, many of your legal obligations and requirements also cease. However, you may still be liable for your conduct when you were a director.

It is important that you follow the formalities for resigning as a director to ensure you are no longer named as a director on the record. Here we explain the different ways you can resign as a director.

Follow the company’s constitution or replaceable rules

How you resign as a director of a company depends on how your company is governed – for example, whether the company has its own constitution, if it has adopted the replaceable rules under the Corporations Act 2001, or if it is using a combination of both to manage its internal relationships and operations.

Replaceable rules are a basic set of rules for managing your company. If a company doesn't have a constitution, it can use the replaceable rules instead. If a company uses the replaceable rules, it does not need to have a written constitution and won't have the expense of keeping it updated as the law changes.

If a company has a written constitution, it must keep a copy as part of the company's records. See constitution and replaceable rules for more information.

Whichever rules are adopted by the company, you should follow the procedure set out in those rules to resign your position as a company director.

Resigning or removing a director using replaceable rules

If you use the replaceable rules:

  • A director can resign as a director of a company by giving written notice of your resignation to the company at its registered office;
  • A proprietary company may, by resolution, remove a director from office and may, by resolution, appoint another person as a director instead;
  • A public company may, by resolution, remove a director from office.

Directors of public companies cannot be removed by other directors.

Sole director and member proprietary companies

If a proprietary company has only one officeholder, it does not need to follow replaceable rules or have a constitution. If another director or member is appointed or resigns, then replaceable rules automatically apply to the company. This can be changed to a constitution at a later date.

Notify ASIC of the resignation or removal of a company director

As a director, you can notify ASIC of your resignation or removal from the company. To be effective, the notice of resignation must be accompanied by a copy of the letter of resignation given to the company.

If you don’t notify ASIC, the company must inform ASIC within 28 days of the resignation or retirement using this online form: Removing an officeholder

Changes to director resignations from 18 February 2021

In February 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was enacted to help combat illegal phoenix activity. Illegal phoenix activity involves creating a new company to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements.

The law prohibits company directors from improperly backdating their resignation or leaving their company with no directors. 

Date of resignation

From 18 February 2021, if you resign as director, you or the company need to notify ASIC within 28 days of resignation. Where you or the company do not notify ASIC within 28 days, the effective resignation date will be the lodgement date. For example, if you resign on 1 March 2021 but neither you or the company notify ASIC until 1 August 2021, your resignation date will be recorded as 1 August 2021. Late fees will still apply.

To fix the resignation date to a date earlier than 28 days, applications must be made to ASIC or the court.

To fix a resignation date that is more than 28 days but is 56 days or less, you or the company may make the application to ASIC within 56 days from the claimed resignation date and using a Form 502 Application to change the cessation date of a director, providing reasons. A fee will apply. If ASIC accepts the application, the resignation date will be fixed as the claimed resignation date, subject to the last director requirements below.

Applications to the court must be made within 12 months of the claimed resignation date unless the Court allows a longer period. If the court fixes an earlier resignation date, the Order must be lodged with ASIC by the applicant using a Form 105 Cover page for office copy of a court order within two business days of the court making the order. Failure to do so is an offence of strict liability and late fees will apply.

Last director resignation has no effect

Unless a company is being wound up, directors will also no longer be able to resign if they are the last remaining director on ASIC records, leaving a company with no directors. Accordingly, submissions using a Form 484 Change to company details or Form 370 Notification by officeholder of resignation or retirement to cease the last appointed director without replacing that appointment will be rejected.

Last updated: 30/03/2021 09:22