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Company officeholder duties in plain English

Company officeholder duties in plain English

As a business owner or officeholder, you have several responsibilities in the eyes of the law. We break down some of the jargon to help keep you up to date on your requirements.

According to the Australian Securities and Investments Commission (ASIC), company officeholders must adhere to the Corporations Act 2001, which includes several obligations, such as:

  • Being honest.
  • Being aware of what your company is doing.
  • Paying debts on time.
  • Keeping financial records.
  • Acting in the company’s best interests.
  • Being particularly careful if you are handling other people’s money.

You must also disclose any personal interests you have that could conflict with your responsibility as an officeholder.

Duties

You are required to analyse how your decisions will affect the company, particularly when it comes to dealing with large sums of money. For example, if you invest money into one area of the business, how will it impact on the business’s overall performance?

Officeholders are also required to seek professional advice – when it’s needed – to help you make informed decisions. You must also participate in directors’ meetings and ensure you question managers and staff about how the business is performing.

Bookkeeping

As a business owner or officeholder, you might need to keep company and financial records. This can include:

  • Accurate financial statements, such as general ledgers, cash records, wage and superannuation records, invoicing and inventory.
  • Deeds, contracts and agreements.
  • Minutes of meetings.
  • Registers of members, options and debenture holders.
  • Investment records.

You may also be required to prepare monthly statements, such as a statement of comprehensive income, a statement of financial position and a statement of cash flow. Your records can be kept electronically, but you must be able to provide hard copies upon request.

Keep ASIC informed

ASIC must be informed within 28 days if your company’s details change, such as:

  • Appointment changes or name or address changes of officeholders.
  • Changes to shares held by a top 20 proprietary company member.
  • Share cancellations.
  • A change of the company name.

According to ASIC, companies must have a minimum number of directors and secretaries. If your business is proprietary – for instance, with 'Pty Ltd' in the name – you must have at least one director who lives in Australia. You are not required to have a secretary, but if you do have secretaries, at least one must live in Australia. For public companies – those without 'Pty' in the name but with either 'Ltd' or 'limited' – at least three directors are required, at least two of whom must live in Australia ordinarily. You must also have at least one secretary who lives in Australia. Operating your business without the minimum number of officers would put you in breach of the Corporations Act, so be sure you understand the obligations according to your own situation.

Running a business is not easy, particularly when it comes to your legal requirements. The above is just a selection of your obligations as a company officeholder. It's always a good idea to seek advice from a professional, such as a lawyer or accountant, to ensure you understand the law and your obligations so your business can keep operating to its full potential.

A trusted, qualified business advisor can help you make decisions for the good of your company, as well as keep you on the path to compliance. Learn how to choose an advisor you can trust.

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