Appointing an Alternate Director

What is an Alternate Director?

An Alternate Director is a person who is appointed to act as a director, as a substitute for an existing director, for a specified period.  An Alternate Director generally would have the same powers as a director.  However, their powers and duties can vary depending on the terms of their appointment.

How to appoint an Alternate Director

Some companies have rules governing the appointment of an Alternate Director in its Constitution.

With the other directors’ approval, a director may appoint an Alternate Director to exercise some or all of their powers for a specified period pursuant to section 201K(1) of the Corporations Act 2001 (Cth) (Act).  Under section 201D of the Act, the consent of the Alternate Director should be obtained in writing before they are appointed.

The company must then notify the Australian Securities & Investments Commission (ASIC) within twenty-eight (28) days after the Alternate Director is appointed in accordance with section 205B(2) of the Act.

The notice to ASIC must specify:

1. the personal details of the person who is appointed as the Alternate Director; and
2. the terms of their appointment, including when the Alternate Director is to act as a director.

The prescribed ASIC form is a Form 484 Change to Company Details.  The personal details of the Alternate Director required to be notified under section 205B(3) of the Act include:

1. their full name;
2. any former names;
3. date and place of birth; and
4. their address.

Powers of an Alternate Director

Section 201K(3) of the Act provides that when an Alternate Director exercises the director’s powers, it is just as effective as if the powers were exercised by the director themselves.

The terms of the Alternate Director’s appointment should be clear and specify the duties and conditions of what they are empowered or entitled to do.  Some examples of what an Alternate Director may be appointed to do include:

1. attending board meetings;
2. receiving notices or documents;
3. power to vote; and
4. sign documents on behalf of the company.

The terms should also be clear on any restrictions the company imposes on the Alternate Director.

Duration of appointment

The length of an Alternate Director’s appointment will depend on the terms of their appointment.  The duration of the appointment does not need to be specified for the appointment to be valid.  Under section 201K(4) of the Act, the appointing director may terminate the appointment of the Alternate Director at any time.

When the appointment is terminated, the termination must be in writing and a copy needs to be given to the company pursuant to section 201K(5) of the Act.  In addition, another Form 484 needs to be submitted with ASIC upon termination in accordance with section 205B(5) of the Act.

Section 205B(6) states that ASIC does not need to be notified if an expiry date was provided at the time of the Alternate Director’s appointment and their appointment ends on that date.

Further information

If you need to appoint an Alternate Director for your company, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

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