If you’re confused about the many roles and responsibilities an Australian company must fill, you’re not alone. Many businesses when setting up in Australia run into trouble understanding their finer differences.
In order to find the right person or organisation to hold the role, you must understand their function. These roles not only come with some heavy responsibilities but also carry hefty financial consequences if not adhered. We’ve put together this guide to help make it easier to understand each role.
- Australian Resident Director
- Public Officer
- Local Agent
Australian Resident Director
What is a resident director?
One of the requirements stipulated by ASIC when setting up a company in Australia is that all private companies registered in Australia must have a local Australian resident appointed as a director of the company at all times.
To be eligible to be a director of a company, they must:
- be at least 18 years of age
- ordinarily, reside in Australia
- consent to taking on the role and responsibilities of a director.
A proprietary company (Pty) must have at least one director.
A public company must have a minimum of three directors, with at least two of whom must ordinarily reside in Australia.
The responsibilities of an Australian resident director
The resident director plays a significant role in the strength and success of a business and comes with responsibilities imperative to supporting and ensuring compliance of an Australian business.
- Liaising with regulatory authorities, government agencies and financial institutions
- Managing your annual compliance obligations, such as ASIC registrations and changes, and all ATO tax compliances.
It is an important decision and even challenging to choose a Resident Director given the obligations that go with the nomination. It is advised that you proceed with caution before appointing a nominee.
The skills needed by the resident director
Whether you have appointed a resident director in a nominee capacity or as a managing director, this person must be familiar with and meet all corporate governance responsibilities under the Australian Corporations Act 2001.
The director must have sound financial skills, to ensure financial records and reporting requirements are compliant and adequate financial systems are in place to manage and control all accounting activities.
Under the director penalty regime, directors can become personally liable for:
- unpaid PAYG withholding amounts
- unpaid superannuation guarantee charge (SGC) obligations applicable from and including 30 June 2012 (that is, the June 2012 or later quarters).
The resident director will also need to be familiar with and compliant in all business registration obligations and requirements, ensuring their accuracy and on-time lodgement with the necessary regulatory bodies.
Further reading about Australian resident directors.
What is a public officer?
A public officer is the Company’s representative to the Australian Tax Office and is responsible for the Company’s obligations under the Income Tax Assessment Act 1936.
A public officer can be appointed at the time of company registration. If you have not appointed a person as a public officer at incorporation, you can nominate one within three months of the company commencing to carry on business (registration).
The notification of appointment must include the public officer’s name and a contact address. There are daily fines (as of 2018, the fine is $110 per day) for every day the business does not have a public officer appointed.
What are the duties and responsibilities of a public officer?
The public officer is answerable for everything that is required by the company on tax-related purposes.
If the company is in default, the public officer is liable to these same penalties however, they are not liable for the payment of tax due by the company.
Skills required of the public officer
A public officer must have the capacity to understand the role and responsibilities that come with the appointment. Detailed knowledge of accounting and tax obligations is required as they will be the liaison between the tax department and the company. They need to ensure the company is registered with the appropriate authorities and is paying all required taxes.
For detailed information on the role of a public officer, read our blog ‘What is a Public Officer and why do I need one?
What is a local agent?
If an entity is a ‘foreign company’ – a company registered outside Australia – in section 9 of the Corporations Act 2001 (Corporations Act), it must always have a local agent (Australian) formally appointed. The local agent of a registered foreign company:
- is responsible for any obligations the company must meet
- maybe liable for any breaches or penalties.
The local agent (also known as power of attorney) must be:
- A natural person or company
- Resident in Australia
- Authorised to accept services of notices and processes on behalf of the foreign company.
A memorandum of appointment of a local agent (Form 418) must be drawn up, and include the name, address and appointment date of the local agent. If your local agent stops acting as an agent, you must appoint another one and advise ASIC.
What are the responsibilities of the local agent?
A foreign company must appoint a local agent for services of notices and –
- is responsible for any obligations the company must meet or are required by or under the Corporations Act.
- They accept personal liability for any breaches or penalties imposed on the foreign company for any breach of the Corporations Act if a court or tribunal hearing considers the local agent should be liable.
Who can be a local agent?
A local agent does not need to be related to the registered foreign company, for example, Penguin Management offers a local agent service to foreign companies.
Local agents will charge a fee to act as an agent on behalf of the foreign company and must maintain a registered office in Australia.
The local agent may require your foreign company to indemnify the local agent and may ask that the foreign company provide security in favour of your Australian agent.
Does my business need a resident director as well as a local agent?
A resident director is required for an Australian incorporated company whereas a local agent is required for a foreign company doing business in Australia.
An entity does not have both – it either has a local director if an Australian company or a local agent if a foreign company.
If you want to discuss any of these required roles or responsibilities or are having trouble finding the right person for the role, talk to a Penguin Management accountant today on 1300 318 870 or contact us here.
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