How to become a company director
New ID requirement for directors
Company directors are now required by law to apply for a director identification number (director ID). Find out more at our Director ID information page.
To become a director of an Australian company you need to consent to the role in writing. All companies must have at least one director, but larger companies may have a board of directors who collectively manage the business of the company. This page sets out what it takes to become a company director.
- Who can be a company director?
- What it means to be a company director
- Shareholder responsibilities
- Companies with a sole director who is also a member
Who can be a company director?
To be eligible to be a director of a company, you must be at least 18 years of age and consent to taking on the role and responsibilities of a director. You must provide your signed consent in writing before being appointed as a director. The company must keep this written consent and update ASIC whenever there are key changes to the company, including the appointment of a new director.
If the company is a proprietary company (has ‘Pty’ in its name) it must have at least one director, who must ordinarily reside in Australia. Propriety companies that engage in crowd-sourced funding must have at least two directors.
If the company is a public company (doesn’t have ‘Pty’ in its name), it must have a minimum of three directors, at least two of whom must ordinarily reside in Australia. Public companies must also have at least one secretary, and the secretary must reside in Australia.
Find out more about minimum officeholders for a company.
Who cannot be a company director
In certain circumstances, a person is automatically disqualified from being a company director. This includes, but is not limited to, if they are an undischarged bankrupt or have been convicted of certain types of offences. For more information, please see section 206B of the Corporations Act.
What it means to be a company director
Before becoming a director, you should fully understand your role and legal obligations regarding the management of the company. Don’t become a director at the insistence of others, or on the promise that you will not have to do anything.
A company exists as a separate legal entity, and has a similar standing to a real person. Therefore, as a company director, you must carry out your duties in accordance with certain rules. You must always act in good faith, in the best interests of the company (even where this may conflict with your personal interests) and for a proper purpose. Find out about more about company director key responsibilities.
Shareholder responsibilities
Members of a company, commonly referred to as ‘shareholders’, are owners of the company. Directors must act in the best interests of the company, but members are generally free to act in their own interests.
Each type of company must have at least one member and the minimum number of directors (i.e. one director for a proprietary company and at least three directors for a public company). So, proprietary companies must have at least one director and one member.
A director can be a member of a company. This is common with companies that operate small businesses. For example, small proprietary limited companies can sometimes have only one director who is also the sole member.
A director can also operate independently from the members, which is often the case with larger types of companies. Where the director is not also a member, the director’s role is to manage or control the affairs of the company without having any ownership of the company.
Find out more about the responsibilities of company shareholders at Information Sheet 47 Company shareholders (INFO 47).
Companies with a sole director who is also a member
The sole director and member of a company is responsible for managing the company’s business and may exercise all of the company’s powers. Similarly, a sole director and member of a proprietary company can appoint another director (by recording the appointment and signing the record).
Even the sole director and member of a proprietary company must keep minutes (a written record) of their resolutions concerning the management of the company. If you are the sole director and member of a company you may pass a resolution by recording and signing your decision.