Reading time: 3 minutes

Not everyone can be a company director. The position requires industry knowledge and having the know-how to deal with the day-to-day matters that the business faces. A valid appointment also requires compliance with certain procedures. Below, we set out the eligibility criteria for becoming a company director and what procedures they must follow for their appointment to be valid.

What are the Directors Duties to a Company?

Directors are mainly responsible for managing the business affairs of a company. A small company must have at least one director while larger companies may have multiple who make up the board of directors (the Board). The company’s constitution and shareholders agreement, as well as the Corporations Act 2001 (Cth) (the Act) give the Board a broad range of powers to carry out their duties. Importantly, a director should know the relevant provisions of the Act which state how he or she is to exercise their powers and discharge their duties, for example:

  • Acting with a degree of care and competence that a reasonable person would do if they were in the same position as that director;
  • Exercising their powers and duties in good faith and always in the best interests of the company;
  • Not using their position as a director to gain an advantage for themselves to the detriment of the company; and
  • Not improperly using information which was received by the director when acting for the company to the disadvantage of the company.

Who Can and Cannot be a Director?

To be a director of a company, the person must be over 18 years of age, and they must provide their consent. A private company or proprietary company will need to have at least one director who must reside in Australia. On the other hand, a public company will need to have at least three directors, two of which must reside in Australia.

Deciding to be a director in a company is an important decision that attracts significant responsibility. Each director will need to fully understand what the position requires of them, including any legal obligations in respect of managing the company (like those set out above).

Unless a court decides otherwise, the following people cannot be directors of a company:

  • An undischarged bankrupt or someone who has not complied with a personal insolvency agreement;
  • An individual who ASIC or a relevant court has banned from being a director;
  • An individual who has been convicted of fraud or other dishonesty related offences.

How Do You Consent to Become a Director?

Your must first provide written consent to your appointment, and the company will need to keep this consent. The company will also be obliged to advise ASIC of a new director appointment. In some cases, however, even if you do not formally consent to be a director, your actions may deem you a shadow director of the company. If you are seen to be a shadow director, you may be held liable for any breaches of law relating to directors duties even if you were not formally appointed as such.


If you have any questions about your legislative duties and responsibilities as a director, get in touch with our commercial lawyers on 1300 544 755.


Negative Online Reviews: What are the Legal Options?

Wednesday 22 September | 11:00 - 11:45am

Negative or false online reviews of your business can be disheartening and damaging. Understand your legal rights and options with this free webinar.
Register Now

Australia’s Global Talent Visa: How to Attract Top Talent

Thursday 7 October | 11:00 - 11:45am

Understand how to navigate Australia’s complex migration system to attract top overseas talent with our free webinar.
Register Now

5 Essential Contracts for your Online Business

Thursday 14 October | 11:00 - 11:45am

Learn which key contracts will best protect your online business with our free webinar.
Register Now

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer