From 1 July 2027, applied isn't enough.A new director must have their Director ID issued and in hand before they're appointed. Today it's enough to have applied. Overseas directors applying on paper can wait around four weeks, so start early.
Every company registered in Australia has to meet the Corporations Act 2001 (Cth), and ASIC enforces it. One of the rules that catches foreign-owned companies first is the resident director rule.
What the rule says
Section 201A of the Corporations Act sets the minimum number of directors:
- Proprietary companies (the ones with "Pty" in the name) must have at least one director, and at least one director must ordinarily reside in Australia.
- Public companies must have at least three directors, not counting alternates, and at least two of them must ordinarily reside in Australia.
The resident director doesn't have to be an Australian citizen. What matters is that they ordinarily live here. The rule also applies for the whole life of the company, not only at registration. If your only resident director resigns or moves overseas, the company is in breach until a replacement is appointed.
Why Australia requires a resident director
The rule keeps someone in Australia accountable for every Australian company. Regulators such as ASIC and the ATO can reach a director who lives here, and that director carries the full weight of directors' duties under Australian law. It is about transparency and accountability, so a company can't be run entirely from offshore beyond the reach of local enforcement.
Can a non-Australian be a director?
Yes. People who live overseas can be directors of an Australian company, as long as the company also has the resident directors section 201A requires: one for a proprietary company, two for a public company.
Who can't be a director
Some people are automatically disqualified from managing a corporation, including someone who:
- is an undischarged bankrupt, or has a personal insolvency agreement that hasn't been fully met
- has been disqualified by ASIC or a court
- has been convicted of certain offences, including offences involving dishonesty
Every director also needs a Director ID before they're appointed. See the Director ID questions for how that works for both resident and overseas directors.
What a resident director is responsible for
A resident director is a full director. They carry the same duties as every other director, including to:
- act in good faith in the best interests of the company
- keep informed about the company's financial position, and make decisions on that basis
- not use their position or information for their own advantage
- prevent the company from trading while insolvent
These duties apply wherever the other directors live. The directors' duties guide sets them out in more detail.
Should your company appoint a nominee director?
For many overseas companies, finding someone in Australia to fill the seat is the main hurdle to setting up here. A common answer is a nominee director: an Australian resident appointed through a service like mine to meet the residency requirement.
"Nominee" isn't a lesser legal category. A nominee director has the same duties and the same personal exposure as any other director. ASIC expects them to know the company's position and to act in its best interests, not simply to sign what they're sent.
So choose carefully. A nominee director should understand Australian corporate requirements, ask to see the company's financial position, and assess the risk before they consent. If a director offers to sign without asking questions, that should worry you, because it means no one in Australia is actually watching the company's compliance.
This is not legal advice. It's general information only. Please speak to a legal representative about your company's situation before you act on it.