How many directors does a company need?

A proprietary company (Pty Ltd) must have at least one director who ordinarily resides in Australia. There is no maximum number of directors. A public company must have at least three directors, at least two of whom must ordinarily reside in Australia. Every public company must also have at least one secretary who ordinarily resides in Australia.

For proprietary companies, the appointment of a company secretary is optional. If one or more secretaries are appointed, at least one of them must ordinarily reside in Australia. The same person can hold the offices of sole director and secretary simultaneously.

The phrase ‘ordinarily resides in Australia’ is not precisely defined in the Corporations Act, but generally means Australia is the person’s usual or habitual home. Time spent in Australia is relevant but there is no fixed day count, so longer absences need to be looked at case by case. Temporary absences for holidays or business travel do not normally affect the position.

If a proprietary company’s sole director ceases to reside in Australia (or dies, or becomes disqualified), the company is in breach of the Corporations Act and must appoint a replacement as soon as practicable. This is one of the reasons nominee director services exist. They provide a qualified Australian-resident director for companies whose beneficial owners are based overseas.

Directors have significant legal duties under the Corporations Act, including duties of care and diligence, duties to act in good faith and in the best interests of the company, duties to avoid conflicts of interest, and duties not to improperly use their position or information obtained through their role. These duties apply personally and cannot be delegated.