Why Do You Need a Resident Director in Australia?

There are almost 26 million people living in Australia right now. As a result, it would be a good idea for you to consider expanding your business into Australia if you haven’t already.

Before you do this, though, you should know that you’re likely going to need to have a resident director in place. Australian laws say that any international company that opens up a subsidiary company in the country must have a resident director.

So, what is a resident director? And why do Australian businesses that originate from another country need to have one? We’re going to break down everything that you need to know about why you’ll need a resident director in Australia.

Get the answers that you’re looking for below.

What Is a Resident Director in Australia?

The Australian Securities and Investment Commission (ASIC) has very strict rules in place. They don’t allow any Australian businesses to be run solely by those who spend most of their time living in another country. Instead, they want to see that every company in Australia has at least one director who hails from the country.

This person is known as a resident director. A resident director is essentially a person who is capable of taking control of a company that is owned by foreign residents and making important decisions related to it.

That being said, different companies tend to take different approaches to how they decide to use resident directors. Some resident directors will play a hands-on role in the day-to-day operations of companies. Others will more or less be figureheads who don’t have a whole lot of power at the end of the day.

Why Do Foreign Businesses in Australia Need a Resident Director?

At the turn of the century, Australia established the Australian Corporations Act 2001. In it, Section 201A clearly states that all companies that apply to become a part of the Australian Business Register (ABR) must have Australians that sit on their boards.

If a company is a private proprietary company, they need to have at least one resident director on their boards. If they are a public company, they need to have at least three members on their boards with at least two being resident directors from Australia.

Any companies that don’t have resident directors in place can be fined by ASIC. They might also face a wide range of other penalties under they get their act together and find a resident director.

Who Is Eligible to Serve as a Resident Director in Australia?

The good news for the foreign companies that need to hire resident directors to work for them is that it shouldn’t be too difficult to do it. There are plenty of people out there who will be eligible to serve as a resident director in Australia.

In order to serve as a resident director in Australia, a person must meet one of these three basic requirements:

• They need to have an ordinary residency in the country
• They need to be a permanent resident of Australia
• They need to have Australian citizenship

It should be simple enough for foreign companies that need a resident director in Australia to find one. But it’s imperative that they do this from the start to avoid running into issues with ASIC.

Can Any of Your Australian Employees Be a Resident Director?

If you’ve already started to establish your business in Australia and you have several Australian people working for it, you might be considering asking one of them to be your resident director. You can do this if you would like!

But before you appoint someone on your staff to be your resident director, they should be well aware of the responsibilities that come along with this job. They’re going to be subjecting themselves to communicating with ASIC whenever any problems should arise with your company.

You should also make sure that you can trust an employee who was hired to do a different job to serve as your resident director. They’re going to be moving into a relatively powerful position, so you don’t want someone that you can’t trust in the role.

Both you and the Australian employee that you’re thinking about using as your resident director should get on the same page if you’re going to move forward with this arrangement. It’ll make you both feel better about how things will play out in the long run.

What Is the Best Way to Find a Resident Director in Australia?

Do you not already have someone in mind for the resident director position within your company that is expanding into Australia soon? Looking for the right person should be one of your top priorities.

You might be able to conduct a successful search for a resident director in Australia on your own. If you’re the least bit familiar with Australia, you will know where to look for help.

But if you’re just expanding into Australia and don’t know who to make your resident director, there are companies in the country that can assist you. They’ll make starting a business in Australia easier by helping you find a resident director or a nominee director.

A company like this should also be able to lend a hand with other aspects of your business. It’ll set you up for long-term success throughout your time in Australia. 

Bringing a Resident Director On Board in Australia Is Important

If you get caught running a foreign business in Australia without a resident director, it isn’t going to bode well for you. ASIC will come down hard on you and make you regret your decision to operate a company without a resident director.

With this in mind, you should set out to find a resident director for your company as soon as you consider expanding into Australia. You’ll be able to get your company off to the strongest start possible in a new country with the right resident director in your corner.

Look for additional tips on opening up a new business by browsing through our other blog articles.