If you have a criminal record, can you still be a company director? For most people the answer is yes. A run-of-the-mill conviction, such as a driving offence or minor assault, does not stop you from running a company. But the Corporations Act 2001 (Cth) automatically disqualifies anyone convicted of certain specific kinds of offences from "managing corporations", which includes being a director. The disqualification happens by force of the statute, with no court order and no decision by the corporate regulator ASIC required.
The rule is not new. It has been part of Australian company law since the uniform companies legislation of the 1960s, and its purpose is protective. The law assumes that people convicted of serious dishonesty, or of offences connected to the running of a company, should not be trusted with control of corporate money and decision-making, because of the risk to shareholders, creditors and employees. This article explains when a conviction triggers disqualification, what disqualification actually means in practice, how long it lasts, and the two ways back in: waiting out the clock, or applying for leave to manage again. It matters to you if you are facing charges, if you have recently been convicted, or if your company is considering appointing a director who has a criminal record.
The players in a disqualification
A disqualification is not something a single person does to you. Several actors sit behind the scheme, and each has a distinct role:
- The director or would-be director: the person whose conviction triggers the rule, and the only person who can apply for leave to manage again during the disqualification period.
- ASIC: the regulator. It keeps the public register of disqualified people, receives notices of leave applications, can ask the court to extend a disqualification, and gives written permission to manage to people it has itself disqualified.
- The courts: the convicting court deals with the underlying offence. The Federal Court, and State and Territory Supreme Courts exercising corporations jurisdiction, hear applications for leave to manage.
- The company: the board, shareholders and creditors are the people the rule protects. The company also carries obligations, including telling ASIC within 28 days when a director stops holding office.
The interests of these players do not always align. The disqualified person wants to keep working; ASIC and the court want to protect the company's stakeholders from the risk the conviction represents. Understanding that tension explains most of what happens next.
Which convictions trigger automatic disqualification
Section 206B of the Corporations Act 2001 (Cth) sets out when a person "becomes disqualified from managing corporations" as a result of a conviction. The key word is becomes: the disqualification operates automatically from the moment of conviction, with no order, notice or hearing required. There are three conviction limbs, and they work differently.
Convictions on indictment that concern the company's business
The first limb, s 206B(1)(a), catches a person convicted on indictment of an offence that concerns the running of a corporation. That means the offence must have been prosecuted by indictment in a higher court, such as a District, County or Supreme Court, rather than dealt with summarily in a local or magistrates court. The offence must concern one of two things: making, or participating in making, decisions that affect the whole or a substantial part of the business of the corporation, or an act that has the capacity to affect significantly the corporation's financial standing.
This limb is aimed at offences connected to the person's own role in a company, such as a director convicted on indictment of defrauding the company they manage. The offence does not need to be one that only a director could commit, but it must relate to corporate decision-making or the company's financial position.
Offences under the Corporations Act and dishonesty offences
The second limb, s 206B(1)(b), covers two categories of offence, and unlike the first limb it does not matter whether the conviction was on indictment or summary:
- A contravention of the Corporations Act itself that is punishable by imprisonment for a period greater than 12 months. Insider trading is a practical example. In Castledine [2023] FCA 249, the Federal Court recorded that a conviction for disclosing inside information, a contravention of the Act punishable by imprisonment for more than 12 months, automatically disqualified the person from managing corporations.
- An offence that involves dishonesty and is punishable by imprisonment for at least 3 months. Fraud, theft and similar offences clearly qualify, and the dishonesty does not have to relate to a company at all. The Act defines the standard in s 9: "dishonest" means dishonest according to the standards of ordinary people. That is a single, objective test. The Act does not list every offence that counts as dishonest, which is one reason a lawyer's characterisation of a specific conviction can matter.
This is the limb that catches most people unexpectedly, because a relatively short maximum penalty is enough. A dishonesty offence with a 3-month maximum penalty triggers disqualification, and the offence can be a State or Territory offence rather than a federal one.
Convictions in foreign countries
The third limb, s 206B(1)(c), catches a person convicted of an offence against the law of a foreign country that is punishable by imprisonment for a period greater than 12 months. The Act goes further: it states that the offences covered by the first limb (management-related offences) and the dishonesty limb expressly include offences against the law of a foreign country. So a foreign dishonesty conviction punishable by 3 months or more can disqualify you even though the general foreign-offence threshold is 12 months. A criminal record from overseas therefore needs to be checked against the same tests as an Australian one.
Other automatic triggers in the same section
The same section also disqualifies people who are undischarged bankrupts, people who have not fully complied with a personal insolvency agreement, and people disqualified by a court order in a foreign jurisdiction prescribed by the regulations. These are not conviction-based, but they sit alongside the criminal-record rules and are worth knowing about if your record and financial history overlap.
What "managing corporations" actually covers
Disqualification is not limited to holding the title of director. Section 206A of the Act treats a person as managing a corporation if they make or participate in decisions affecting the whole or a substantial part of the business, if they exercise the capacity to affect significantly the corporation's financial standing, or if they communicate instructions or wishes to directors who are accustomed to act on them. The disqualification also applies across every Australian company at once. It does not matter that the conviction had nothing to do with the company you now want to run, and resigning from one board does not reset anything.
What disqualification actually means
Because the disqualification is automatic, its consequences follow immediately on conviction.
First, you stop being a director, alternate director or secretary of every company you are involved with. Section 206A(2) of the Act provides that a disqualified person ceases to hold those offices automatically, unless they have permission to manage the particular corporation. The company does not need to pass a resolution removing you, although it does need to act: under s 205B(5) the company must lodge notice with ASIC within 28 days of a person stopping being a director.
Second, continuing to manage while disqualified is itself a criminal offence. Section 206A(1) makes it an offence to make corporate decisions, to exercise the capacity to affect the corporation's financial standing, or to direct the directors from behind the scenes, while disqualified. The offence is one of strict liability as to the fact of disqualification, so not knowing that you were disqualified is not a defence to that element. This means a disqualified person cannot quietly carry on running the business through a spouse, a relative or a trusted employee.
Third, the disqualification is recorded. Section 1274AA of the Act requires ASIC to keep a register of people disqualified from managing corporations, and ASIC publishes a Banned and disqualified register that anyone can search by name. Lenders, insurers, suppliers and prospective business partners can check it, so a disqualification has commercial consequences beyond the legal ones.
How long the disqualification lasts
The default period is five years. Under s 206B(2), the period starts on the day of conviction and lasts five years from that day if you do not serve a term of imprisonment. If you are sent to prison, the five years runs from the day you are released.
Two consequences follow. The clock runs from the conviction, or from release, not from when the offence was committed. A conviction handed down last week for offending that happened years ago starts a fresh five-year period. Conversely, a conviction from more than five years ago, with no imprisonment, will usually have run its course by now.
Five years is not a ceiling. Section 206BA of the Act lets ASIC apply to the court to extend the period of disqualification by up to an additional 15 years, taking the total to as long as 20 years. ASIC must apply before the period begins or within the first year of the disqualification, and it can only apply once. The extension is not routine, but it means the automatic five years should never be treated as a guarantee.
Getting back in: leave to manage
The Act does not leave a disqualified person with no options. During the period, a person disqualified by a conviction can apply to the court under s 206G for leave to manage corporations generally, a particular class of corporations, or a particular corporation. Leave is most often sought for one specific company, commonly a family business. A person disqualified by ASIC rather than by conviction takes a different route, applying to ASIC for written permission under s 206GAB of the Act.
The process has fixed steps. The applicant must lodge notice of the application with ASIC at least 21 days before starting proceedings. The court may grant leave subject to exceptions and conditions, and a copy of any order must be lodged with ASIC within 14 days. ASIC may later apply to revoke the leave.
The test the court applies comes from Adams v Australian Securities and Investments Commission [2003] FCA 557, the leading decision on s 206G. The applicant bears the onus of showing the court should make an exception to the legislative policy behind the disqualification. Hardship to the applicant alone is not enough; the law assumes some hardship. The court weighs the nature of the offence, the nature of the applicant's involvement in it, the applicant's character and conduct since the conviction, the structure and business of the company, and the interests and risks to shareholders, creditors, employees and the public.
The recent decision in Castledine [2023] FCA 249 shows how this works in practice. Mr Castledine was automatically disqualified after pleading guilty to disclosing inside information. He applied for leave to manage a single private company that he had jointly run with his wife for years and that traded for their own benefit. ASIC was notified and did not oppose. The court granted leave, but conditioned it so that the company could only buy and sell shares and sub-underwrite until the disqualification period ended. The company's narrow, private character and the absence of outside stakeholders were central to the outcome.
Where people get caught out
The traps in this scheme tend to be the assumptions people make about it:
- "It was only a summary offence." The management limb requires a conviction on indictment, but the dishonesty and Corporations Act limbs do not. A summary conviction for a dishonesty offence punishable by 3 months or more still triggers disqualification.
- "The offence was years ago." What matters is when the conviction occurred and when any imprisonment ended, not when the conduct happened. An old offence with a recent conviction starts the clock fresh.
- "It was in another country." Foreign convictions are caught twice: by the 12-month threshold in s 206B(1)(c), and by the dishonesty limb, which expressly extends to foreign offences.
- "I'll just advise from the sidelines." Telling the directors what to do, where they are accustomed to act on your instructions, is itself an offence under s 206A(1). The exception for genuine professional advice given in a professional capacity or business relationship is narrow and does not cover running the show informally.
- "The company will look after it." The company has its own duties. It must notify ASIC within 28 days of a director ceasing to hold office, and a board that lets a disqualified person keep making decisions exposes both the person and the company to risk.
- "Five years and I'm back." ASIC can seek an extension of up to 15 years, so the period is not fixed until it has run.
When you need a lawyer
The cheapest advice is usually obtained before a conviction exists. A guilty plea to an offence involving dishonesty, or to a contravention of the Corporations Act, can carry an automatic corporate disqualification that has nothing to do with the sentence imposed. A lawyer can advise before you enter a plea on whether the offence will trigger s 206B, whether the penalty threshold is engaged, and what the collateral consequences will be.
After a conviction, a lawyer can confirm whether you are in fact disqualified, work out when the period ends, and deal with the immediate consequences such as ASIC notifications and any application for leave. Before a leave application, legal advice is close to essential: the applicant carries the onus, the court weighs risk to others rather than hardship to the applicant, and the evidence about the company's structure and stakeholders has to be assembled properly.
Companies should also take advice when appointing directors. Checking a candidate against ASIC's public register, and understanding what would happen to the board if a sitting director is convicted mid-term, is straightforward due diligence that avoids a surprise vacancy and a breach of the notification rules.
Your directorship after a conviction: the clock and the comeback
The single most important thing to understand about this scheme is that it is automatic but not permanent. The conviction itself does the work, the five-year clock starts at conviction or release, and ASIC can stretch the period to as long as 20 years if it moves in time. Your best opportunity to shape the outcome sits before the conviction, at the plea stage, when advice about the collateral corporate consequences can genuinely change what you decide. After the conviction, the question becomes whether to wait out the clock or to apply for leave, and the court's focus will be on the risk you pose to other people's money, not the hardship you will suffer. Early advice on either question is far less expensive than discovering, after a guilty plea, that you are barred from the company you built.