Corporate Trustees & the Resident Director Requirement

This article provides information for corporate trustees requiring a resident director when directors are moving overseas. Read on...


The use of corporate trustees in Australia

The use of a corporate trustee for family trusts (discretionary trusts) or units trusts is widely utilised here in Australia as it brings a number of key benefits and advantages including:

  • limited liability for individuals, as the company is a separate legal entity. This means that if there are any legal issues with the trust, the company is legally responsible and not the directors that are controlling it;
  • easier separation of trust assets and personal assets as they are held in different names. As a result, it is relatively straightforward to distinguish which of a person’s assets are part of the trust;
  • greater asset protection. If a person gets sued, for example, assets held in a separate trust with a corporate trustee are the company’s assets and not the person’s; and
  • simpler succession and control of the trust in the event of death. Since a company cannot ‘die’, the company continues to act as trustee if something happens to one of its directors and the corporate trustee must simply replace its director. The title to the assets would not change, so the trust’s assets do not need to be transferred in the case of death of a director.

Moving away from Australia and the requirement for a resident director

However if corporate trustee directors suddenly decide they wish to migrate away from Australia, perhaps for business or family reasons, then they may find themselves with the issue of being in breach of the resident director requirements of the Corporations Act. That is, all proprietary limited companies registered with ASIC require at least one resident director appointed at all times.

This requirement can prove problematic for those without a resident director available or who are not comfortable using family or friends to take up this role. Given the responsibilities and fiduciary risks of being a company director in Australia, that person should be experienced in meeting corporate governance and other business registration requirements.

As such it often makes sense to use the services of a professional resident director, from a firm that you can trust, in order to fulfil that role. Our resident director services are available for corporate trustees of family trusts, discretionary trusts, units trusts. The benefits of using a firm like ABN Australia and our resident director services include:

  • Comply with the Australian Corporations Act 2001 – which requires every company incorporated or registered in Australia to have, at all times, at least one director who ordinarily resides in Australia. Our nominee resident director will keep you compliant at all times in terms of this residency requirement.
  • Suitable name to represent your business – our available resident directors are all in-house staff who are seasoned compliance and accounting professionals who understand the needs of international businesses. Our directorship helps to add credibility to your business, whilst providing governance support to keep you compliant in Australia.
  • Ensure Business Continuity – it can be tempting to appoint a local employee or local friend for your new company in Australia in order to meet the resident director requirements. However, in our experience, employees or family members will resign at short notice for various reasons leaving the company scrambling to find a replacement director. In addition, these persons often don't fully understand the responsibilities and risks of being a director in Australia. Further, you yourself may not be comfortable with these persons have such authorisations and access to records of your company that a director normally requires. As such using the services of an independent professional firm ensures business continuity and eliminates conflicts of interest.
  • Cost-effective solution – Appointing a resident director to your company will greatly help you to keep your overheads low and will ensure you retain effective managerial control of your business. Our fees are fixed and affordable, and we do not charge you for minor compliance or administrative support connected with being a director of your company (such as bank account support).

Moving away from Australia and the requirement for a resident director

If you are considering a move away from Australia, you should also obtain taxation and/or financial advice to be fully informed of the tax implications of moving abroad and being a non-resident. This article is provided for general information purposes only.

Please contact us to discuss our resident director services on contact@abnaustralia.com.au.