Yes. If you set up an Australian proprietary company, at least one of its directors must ordinarily reside in Australia (s 201A Corporations Act 2001). This applies even when the company is wholly owned by an overseas parent and every other director lives abroad.
What "ordinarily resides" means
The Corporations Act does not define the phrase. In practice it means Australia is the person's settled home, where they usually live, rather than somewhere they visit. An Australian citizen who has lived in London for ten years is unlikely to qualify. A foreign national who lives and works in Sydney usually will.
Why a local director matters
Having a director based in Australia also gives the board someone with local knowledge and a practical point of contact for Australian governance and compliance matters.
What happens if you don't comply
A company without a resident director is in breach of the Corporations Act. In practice the bigger problems are practical. You will need to name a resident director when you register the company, and banks, landlords and major customers may ask to see a local director before they deal with you. If your resident director resigns, you should appoint a replacement promptly.
Your options
- Appoint an existing Australian employee. This works well once you have a senior person in Australia. Remember they take on the full legal duties of a director.
- Appoint a trusted adviser or contact. Some groups ask their accountant or a business contact. Check they understand the role and have appropriate insurance.
- Engage a professional resident director. An independent, experienced director fills the role from day one, brings governance expertise and gives the board a reliable local point of contact.
What a good resident director does
A resident director is a full board member with the same duties as every other director: care and diligence, good faith, avoiding conflicts and preventing insolvent trading. A good resident director will:
- understand your group and how the Australian company fits into it
- maintain oversight of the company's Australian governance and compliance obligations, working alongside your accountants and payroll advisers
- review and sign board documents promptly, across your time zones
- raise issues early, before they become problems.
How we help
Reservoir Legal provides resident director services through Australian Resident Directors. Annalise Robertson is a Graduate of the Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia, with company secretary and director experience across international groups.