Are you looking for someone to act as a local director in Australia? We can help.
Why do you need an Australian resident director?
Every Australian company must have at least one Australian resident director.
The company can also have one or more non-resident directors who act alongside the Australian resident director.
Can a foreigner own 100% of the shares in an Australian company?
Yes. An Australian company does not require an Australian resident shareholder. All of the shares in the Australian company can be owned by a foreign person or foreign company.
How does an Australian company enter into contracts?
If a company has two or more directors, then all contracts entered into by the company must be signed by at least two company officers, (i.e. two people who are either a director or a company secretary).
Contracts may also be entered into by a person who has been authorised to enter into the contract by at least two company officers, (i.e. someone with ‘delegated authority’). The party contracting with the company may ask to see this authority.
Therefore if your company has one resident director and at least one non-resident director, you will need to make arrangements so that at least two of these directors can sign each contract. One way to overcome this is to have the company enter into a valid Company Power of Attorney, giving the local director the power to sign contracts on behalf of the company.
What will an Australian nominee director do?
If the company is acting as a holding company or passive investment company, then the role of the nominee director will be relatively straight-forward. However, if the company is carrying on an active trading business, then the level of responsibility increases substantially.
Australian laws place a number of onerous responsibilities on a company director. There are over 700 laws in Australia that can make a director personally responsible for the obligations and liabilities of the company. For this reason people will not take on the role of a nominee director lightly, particularly for trading companies.
A professional nominee director will require processes and procedures to be in place to ensure the company remains solvent and complies with all relevant local laws. A professional nominee director will be able to assist you to put these processes and procedures in place.
The nominee director will:
- Keep an eye on the company’s solvency by reviewing periodic reports from your bookkeeper and accountant, to ensure that the company is able to meet is debts and obligations when they fall due;
- Review business contracts entered into by the company and ensure that the company is able to comply with the obligations under the contract;
- Review employment contracts to ensure compliance with Australian employment laws;
- Oversee local banking arrangements;
- Appoint other advisers (e.g. lawyers, bankers, accountants, and consultants etc) to ensure that the company otherwise fully complies with Australian laws;
- Make annual and periodic filings to the Australian Securities & Investments Commission (ASIC);
- Ensure that the company complies with its Australian tax obligations. This is usually done by the company’s accountant and Tax Agent. But the directors still have oversight responsibility; and
- Report to the non-resident owners about the affairs of the company in Australia.
Who should you appoint as your nominee director?
You need to choose carefully who you appoint as your nominee director. The person you appoint needs to know what is required of them, so that your company continues to comply with all relevant Australian obligations and laws.
The director will also have considerable authority in Australia over the company’s affairs. You therefore need to ensure the nominee is a responsible person who knows what is required of them and who will act properly in the interests of the company.
It can be hard to find a local nominee director for a trading company. This is because the risk of something going wrong is much higher. People who perform this role are usually either an Australian-based senior employee of your own organisation, or a professional adviser (such as an accountant or lawyer).
What will the nominee director require before agreeing to act?
A nominee director will generally require you to:
- Provide them with an overview of the company’s current and proposed activities;
- Provide your business plan, forecasts and budgets;
- Provide any advice that you have that confirms the activities of the company comply with Australian local laws, (e.g. local licensing requirements, consumer laws, importation laws, tax laws, TGA approvals, etc)
- Provide evidence of your financial standing, or the financial standing of the foreign company holding the shares in the Australian company – to show that the company will remain solvent;
- Confirm that the company has appointed a local accountant and Tax Agent;
- Agree to provide regular financial and operational reports, and to provide them direct access to your local accountant and Tax Agent;
- Agree to their fees and charges for acting as a director; and
- Agree to indemnify the company and the nominee director for any liabilities that the company is not able to meet in Australia, in order to avoid insolvency. This will generally make either you, or the foreign parent company, liable for the debts and obligations of the Australian company.
How much will a nominee director charge?
The level of fees charged by a nominee director will depend on a number of factors.
If the company is a passive holding or investment company, then the fees will be relatively modest, in the order of A$300-A$500 per month.
If the company carries on an active business, then depending on the nature of the business conducted by the company, the associated risks, the financial standing of the parent company, and the level of turnover, fees can range from A$1,000-$2,500 per month.
What else do you need to think about?
Your company will also need to notify ASIC of its Principal Place of Business (i.e. the main place where it carries on its business), and its Registered Office (i.e. where ASIC can send formal notices, and where other people can serve formal documents on the company).
You may also require a mail-forwarding service, and an answering and message-forwarding service.
How we can help
Andreyev Lawyers can assist you with all aspects of sourcing and appointing a professional nominee director for your Australian company.