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Directors and shareholders are the key players in most companies. Changes in shareholders or company management may require new directors to be appointed or removed. Importantly, companies must ensure that any changes to the board and management are compliant with the law and ASIC regulations. This article explains how to appoint a new company director.

How do I appoint a new company director?

The process for appointing a new director depends on how your company is governed. Companies with a company constitution and shareholders’ agreement will need to follow the process set out in these documents for appointing a new director. If your company does not have these documents, then the replaceable rules in the Corporations Act 2001 (Cth) will apply.

What are the replaceable rules?

The replaceable rules are basic rules set out in the Corporations Act for managing a company. If a company does not choose to adopt their own company constitution, the replaceable rules will apply.

Under the replaceable rules, a director may be appointed by:

• The shareholders passing a resolution at their general meeting; or
• The board of directors.

Where a board of directors appoints another director, the appointment must be confirmed by the shareholders within the following time limits:

• Proprietary company: Within two months after the appointment is made
• Public company: By resolution at the company’s next annual general meeting.

Who can be a company director?

Company directors must be at least 18 years of age and provide written consent to taking on the role and responsibilities of a director. You cannot be a company director if you:

• Are bankrupt or insolvent;
• Have been banned from managing companies by the ASIC or the court; or
• Have been convicted of offences relating to dishonesty e.g. fraud

What are directors’ duties?

Directors have specific duties under the law, including to:

• Have a Director Identification Number;
• Make decisions in the best interests of the company;
• Not use their position or information gained as a director to harm the company or gain advantages;
• Disclose personal conflicts of interests;
• Not trade while insolvent; and
• Lodge certain information with ASIC, including share issues and financial records.

What else do I need to do when appointing a company director?

• The appointed director must give their written consent to being a director and this must be kept on file by the company.
• Details of the appointment must be lodged with ASIC using Form 484 within 28 days of the appointment to avoid late fees.

Key takeaways

• Companies can appoint a new director by following the process in their company constitution or the replaceable rules
• The replaceable rules are basic company management rules which apply for companies who have not adopted their own constitution
• Under the replaceable rules, directors may be appointed by shareholders or the other directors
• If a director is appointed by other directors under the replaceable rules, such appointment must be approved by the shareholders
• Appointed directors must give their written consent and details of the appointment must be promptly lodged with ASIC

How can Gladwin Legal help?

Gladwin Legal are experts in compliance and company law. We can help with:

• Drafting your company constitution or shareholders’ agreement
• Acting as your company secretary and dealing with ASIC and lodging the required documents on your behalf
• Providing compliance and corporate governance advice

If you require any assistance with company matters, please contact us at or 1300 033 934.