DIRECTOR QUALIFICATIONS & DISQUALIFICATIONS

 defines a director of a company as ‘a person who is appointed to the position of director’.

QUALIFICATIONS

There are no statutory academic, business or other qualifications to be appointed as a
director of an Australian company, either public or proprietary. The only legal requirement is
that a director must be at least 18 years of age to be appointed (sec.201B).

It is usual for a company’s constitution to state that a director need not be a shareholder,
but in some companies this is a prerequisite. Also, a constitution may specify certain other
requirements to be a director.


A person can, however, be disqualified from being a director unless ASIC or the Court
consents – see sec.206A and below.

A person cannot be appointed as a director unless they give their prior written consent
(sec.201D) and provide relevant information.

A proprietary company must have at least 1 director who is a resident of Australia, and a
public company must have at least 3 directors of which at least 2 must be Australian
residents – sec.201A.

Usually directors are appointed by the board (to fill a vacancy or as an additional director),
but directors may also be approved – or removed – by shareholders in general meeting.
ASIC must be notified within 28 days of any change in directors (names and/or particulars)
using Form 484 – sec.205B.

Disqualification
A person must not act as a director (or manage a company) without court consent if they:

1. become bankrupt and/or are an undischarged bankrupt
2. are subject to a personal insolvency agreement or an arrangement under Part X of the Bankruptcy Act that has not been fully complied with
3. are subject to a composition under Part X of the Bankruptcy Act and final payment has not been made; or
4.  have been convicted of various offences such as fraud or offences under company law, such as a breach of duties as a director or insolvent trading. Convicted persons cannot manage a company for five years. And if imprisoned for one of these offences, they cannot manage a company within five years after release from prison.

A person who finds themselves in one of the above categories must lodge a Form 296 with
ASIC. Furthermore, they automatically cease to be as director on the happening of the
event, in which case the company must lodge a Form 484 (within 28 days).

Note, under mutuality arrangements the Australian director disqualification provisions are
recognised and apply in New Zealand and vice versa.