The Resident Director Requirement in Australia Explained

The Australian Corporations Act 2001 mandates that any proprietary (Pty Ltd) company must have at least one director who is "ordinarily resident" in Australia. This means the director's primary place of residence is in Australia.

For foreign founders living overseas, this is a major hurdle to incorporation. You cannot legally register an Australian company without fulfilling this requirement.

A nominee director is a qualified Australian resident who is appointed to your company's board for the sole purpose of meeting the statutory requirement. This is a standard and legal practice for non-resident founders.

Key Aspects of the Role:

• Non-Executive: The nominee has no involvement in the day-to-day operations, management, or finances of your business.
• No Authority: They are not signatories on the company bank account and hold no executive power.
• Compliance Focus: Their role is to ensure the company meets its basic compliance obligations with ASIC.

To protect both parties, a formal service agreement is signed. This legal document clearly defines the nominee's limited, non-executive role and indemnifies them against business activities, as long as the company operates legally.

While a nominee director service is essential for incorporation, it's typically a temporary bridge. The long-term goal for most founders is to either obtain a residency visa and appoint themselves as the director, or hire a local executive-level employee in Australia who can take on the directorship.