CORPORATIONS ACT 2001
Pt 1.5 amended by No 96 of 2010, s 3, Sch 1, Pt 2[12-16], Pt 5 and Pt 6 (effective 30 January 2012).
Pt 1.5 amended by No 5 of 2011, s 3, Sch 1 (effective 22 March 2011).
Pt 1.5 amended by No 66 of 2010, s 3, Sch 1, Pt 1 (effective 28 June 2010).
Pt 1.5 amended by No 101 of 2007, s 3, Sch 1, Pt 3[198-200] (effective 1 September 2007).
Pt 1.5 amended by No 116 of 2003, s 3, Sch 3[8-20] (effective 28 November 2003).
Pt 1.5 amended by No 24 of 2003, s 3, Sch 1[10-14] and Sch 2[2-3] (effective 1 July 2003).
5 Company directors and company secretaries
5.1 Who can be a director.
Only an individual who is at least 18 years old can be a director. If a company has only 1 director, they must ordinarily reside in Australia. If a company has more than 1 director, at least 1 of the directors must ordinarily reside in Australia.
A director must consent in writing to holding the position of director. The company must keep the consent and must notify ASIC of the appointment.
In some circumstances, the Corporations Act imposes the duties and obligations of a director on a person who, although not formally appointed as a director of a company, nevertheless acts as a director or gives instructions to the formally appointed directors as to how they should act.
The Court or ASIC may prohibit a person from being a director or from otherwise being involved in the management of a company if, for example, the person has breached the Corporations Act.
A person needs the Court's permission to be a director if the person has been convicted of certain offences or is, in some circumstances, unable to pay their debts as they fall due.
Generally, a director may resign by giving notice of the resignation to the company. A director who resigns may notify ASIC of the resignation. If the director does not do so, the company must notify ASIC of the director's resignation.
[sections 9, 201A, 201B, 201D, 205A, 205B and 206A-206G, 228-230 and 242 and subsection 1317EA(3)]
5.2 Appointment of new directors.
It is a replaceable rule (see 1.6) that shareholders may appoint directors by resolution at a general meeting.
5.3 Duties and liabilities of directors.
In managing the business of a company (see 1.7), each of its directors is subject to a wide range of duties under the Corporations Act and other laws. Some of the more important duties are:
· to act in good faith
· to act in the best interests of the company
· to avoid conflicts between the interests of the company and the director's interests
· to act honestly
· to exercise care and diligence
· to prevent the company trading while it is unable to pay its debts
· if the company is being wound up - to report to the liquidator on the affairs of the company
· if the company is being wound up - to help the liquidator (by, for example, giving to the liquidator any records of the company that the director has).
A director who fails to perform their duties:
· may be guilty of a criminal offence with a penalty of $200,000 or imprisonment for up to 5 years, or both; and
· may contravene a civil penalty provision (and the Court may order the person to pay to the Commonwealth an amount of up to $200,000); and
· may be personally liable to compensate the company or others for any loss or damage they suffer; and
· may be prohibited from managing a company.
A director's obligations may continue even after the company has been deregistered.
[sections 180, 181, 182, 183, 184, 475, 530A, 588G, 596, 601AE, 601AH, 1317H]
A company other than a proprietary company must have a company secretary. However, a proprietary company may choose to have a company secretary. The directors appoint the company secretary. A company secretary must be at least 18 years old. If a company has only 1 company secretary, they must ordinarily reside in Australia. If a company has more than 1 company secretary, at least 1 of them must ordinarily reside in Australia.
A company secretary must consent in writing to holding the position of company secretary. The company must keep the consent and must notify ASIC of the appointment.
The same person may be both a director of a company and the company secretary.
Generally, a company secretary may resign by giving written notice of the resignation to the company. A company secretary who resigns may notify ASIC of the resignation. If the company secretary does not do so, the company must notify ASIC of the company secretary's resignation.
The company secretary is an officer of the company and, in that capacity, may be subject to the requirements imposed by the Corporations Act on company officers.
The company secretary has specific responsibilities under the Corporations Act, including responsibility for ensuring that the company:
· notifies ASIC about changes to the identities, names and addresses of the company's directors and company secretaries; and
· notifies ASIC about changes to the register of members; and
· notifies ASIC about changes to any ultimate holding company; and
· responds, if necessary, to an extract of particulars that it receives and that it responds to any return of particulars that it receives.
A company secretary's obligations may continue even after the company has been deregistered.
[sections 83, 142, 178A, 178C, 188, 204A-204G, 205A, 205B, 346C, 348D, 349A, 601AD, 601AH]