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.


Redundancies and Restructuring: Understanding Your Employer Obligations

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

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

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

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards