Add Director
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Frequently Asked Questions (FAQ)
Directors have a number of legal responsibilities and duties to the company, primarily stemming from a general duty to act in good faith in the best interests of the company. More specifically, Directors are required to act within the powers conferred upon them by the company’s Articles of Association; they must promote the success of the company and exercise reasonable skill and care and diligence in their particular area of management; they must avoid conflicts of interest (save those declared and approved at a general meeting) and they must not accept personal benefits from third parties without authorization at general meeting (subject to any alternate provisions within the Articles of Association).
An alternate director is a person appointed by a director to act on their behalf when that director is temporarily absent or otherwise unavailable to ful fil their duties – such as when the director is overseas. The powers of the alternate director will depend on will depend on the company’s Constitution – and what the alternate was appointed to do. If company has a Constitution, the alternate director has all of the rights and powers of the director – including voting at meetings – and any power exercised by the alternate is just as effective as if exercised by the director who appointed them. If there are any conditions which apply to the director who is appointing the alternate, then these also apply to the alternate director. A director should only appoint an alternate director if they are, or expect to be, temporarily unable to act as a director. If they are, or expect to be, permanently or indefinitely unable to discharge their duties, they should resign.
Generally speaking, a person is appointed as a director of a proprietary company by either: the directors passing a resolution – provided that in most cases the shareholders must subsequently confirm the appointment; or shareholders passing a resolution to appoint the person as a director of the company. You will need to review your Constitution to determine the time period for the shareholders to confirm the appointment of a director appointed by a resolution of the directors.
Any of the directors may appoint an alternate for any period the director thinks fit – but this must first be approved by a majority of the other directors. The managing director may not appoint an alternate managing director. An alternate can only be appointed by a director with the other directors’ approval.
If the appointing director ceases to be a director, their alternate will automatically cease to be an alternate for that director. The alternate is not required to resign or be removed as an alternate. If they are also an alternate for any other director, they will remain as an alternate for that other director. Even though the alternate will automatically cease to be an alternate director, the company must notify ASIC of both the director ceasing to be a director and the alternate ceasing to be an alternate director for that director.
A non-conformance is when something within the business doesn’t go according to plan, which may result in a customer complaint or a delay in the normal process. These are to be viewed as ‘opportunities for improvement’ and are recorded so that trends can be identified and action can be taken.
