Resident director requirements for foreign-owned Australian companies

Section 201A of the Corporations Act 2001 requires every proprietary company registered in Australia to have at least one director who ordinarily resides in Australia. For public companies, at least three directors are required and at least two must ordinarily reside in Australia. There is no exception to this requirement, regardless of whether the company is foreign-owned, dormant, or newly registered.

The phrase ‘ordinarily resides in Australia’ is not precisely defined in the Corporations Act. The generally accepted interpretation, drawn from case law, is that Australia must be the director’s usual or habitual home. Time spent in Australia is relevant but there is no fixed day count. Temporary absences for business travel, holidays, or short-term assignments overseas do not normally affect residency status. However, an extended relocation overseas may mean, depending on the facts, that the director no longer ‘ordinarily resides’ in Australia.

For foreign groups operating through a locally incorporated subsidiary (Pty Ltd with ACN), finding a suitable resident director can be challenging. A registered foreign company (ARBN) does not need a resident director but must appoint a local agent resident in Australia. The overseas parent may not have an Australian employee, or the employees it does have may not be appropriate for a director role given the legal obligations involved.

Many foreign companies resort to asking their Australian accountant, lawyer, or local contact to act as director. This creates personal liability exposure that is often not properly understood or compensated. A director has statutory duties under the Corporations Act including the duty to act in good faith and in the best interests of the company (section 181), the duty of care and diligence (section 180), the duty not to make improper use of position or information (sections 182 and 183), and the duty to prevent insolvent trading (section 588G). These duties carry civil penalties and, in some cases, criminal penalties.

A professional nominee or resident director service provides a structured alternative. A qualified professional is appointed as a director to meet the residency requirement, with appropriate governance frameworks in place to manage the role. A nominee director is a full legal director with all the associated duties and obligations. It is not a passive, ceremonial, or ‘paper’ role.

When evaluating a resident director service, consider what insurance arrangements, including any directors’ and officers’ (D&O) cover, will apply, whether they have a documented authority matrix (specifying which decisions the nominee director can make and which require board or parent company approval), whether they provide ongoing ASIC compliance monitoring for the entity, and whether they have experience with the specific regulatory requirements applicable to foreign-owned companies.

CoSec Partners provides resident director services with a structured onboarding process, documented authority matrices, and ongoing ASIC compliance monitoring for the entity. Insurance arrangements are agreed for each engagement. We work in two models: through the referring accounting or legal firm (where the firm manages the relationship and we provide the director), or directly with the foreign-owned client. Both models include the same level of governance and oversight.

If your client is a foreign-owned company that currently relies on an informal resident director arrangement, or has a vacant resident director position, contact us to discuss how we can help. We also offer ASIC registered agent services, registered office addresses, and full corporate secretarial support for foreign-owned entities.