You need a director who lives in Australia
You are setting up the Australian arm of your business from overseas, or incorporating a new company while your team is still offshore, and the process has stalled on a rule you did not expect. A proprietary company must have at least one director who ordinarily resides in Australia, and a public company must have at least three directors with at least two ordinarily resident, under s 201A of the Corporations Act 2001 (Cth). If no one in your group lives here yet, you cannot register the company, open a bank account or sign a lease until that requirement is met.
That is usually the moment someone suggests nominee director services. A nominee director is an individual formally appointed to the board to satisfy a legal or practical requirement, with the expectation that they play a limited role under a written arrangement. The services are legitimate and common, but the decision around them is routinely misunderstood. This guide sets out the options, the factors that should drive your choice, and the point at which a lawyer's help is worth the fee.
Your realistic options
You have three workable paths. First, you can engage a nominee director service that provides a resident individual who is properly appointed and registered with ASIC. Second, you can appoint someone who is already in Australia: an employee, a co-founder who has relocated, or a newly hired local executive. Third, you can delay incorporation until a founder or suitable appointee is in the country.
One option that looks available but is not is the silent or paper director. Australian law does not recognise a director who holds the title without the duties. From the moment a person consents to act and is registered with ASIC, they carry the full set of legal obligations that attach to any director. The Act goes further. Under s 9AC, a person who was never validly appointed can still be treated as a director if they act in the position, or if the board is accustomed to acting on their instructions or wishes. And only an individual aged 18 or over can be appointed as a director, under s 201B, so a holding company cannot sit on its own subsidiary's board as a way around the rule. The real question is not how to find a signature. It is who you appoint, and how you govern the appointment.
Factors to weigh before you decide
The right answer depends on your timing, your people and your appetite for governance overhead. Work through these five factors before you commit to a nominee arrangement.
Factor 1: Whether the residency rule applies to you
The starting point is the size and structure of the company. A proprietary company needs one director who ordinarily resides in Australia. If the company has crowd-sourced funding (CSF) shareholders, it needs at least two directors and at least one of them must ordinarily reside here. A public company needs three directors, with at least two ordinarily resident. All of this is in s 201A of the Corporations Act 2001 (Cth).
The Act does not define "ordinarily resides". It is judged on the individual's circumstances, and it is not satisfied by a post-office box or a short annual visit. A nominee who genuinely lives in Australia can satisfy the rule, which is why the services exist. Your three options sit in direct comparison:
- Nominee director: The fastest path. You pay a fee and the service provides a resident individual who is properly appointed, with all the duties that follow.
- Internal appointee: Cheaper over time and keeps control inside the business, but it only works if you already have someone suitable in Australia or can hire them quickly.
- Delayed incorporation: Costs you time and the ability to contract, but costs nothing in fees and avoids the governance overlay entirely.
If your only obstacle is timing, a nominee works well as a bridge. If there is no realistic plan to reach a permanent resident director, think carefully before building the company around a long-term nominee.
Factor 2: What the nominee legally signs up for
Appointing a director is administratively light. The person consents in writing, the board or members pass a resolution, and the company notifies ASIC within 28 days, under s 205B. The obligations, however, start immediately and are identical to those of a founder-director:
- Care and diligence: The nominee must exercise their powers and discharge their duties with the care and diligence of a reasonable person in the company's circumstances (s 180).
- Good faith: They must act in good faith in the best interests of the company and for a proper purpose (s 181).
- No improper use of position: They must not improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company (s 182).
- No improper use of information: They must not improperly use information obtained as a director, and this duty continues after they leave office (s 183).
The business judgment rule in s 180(2) is the practical shield. A director who makes a judgment in good faith for a proper purpose, is properly informed about the subject matter, has no material personal interest and rationally believes the judgment is in the company's best interests, is taken to have met the care and diligence duty. That means process matters. A nominee who is handed a signature page and nothing else cannot discharge these duties, and cannot rely on the rule.
Factor 3: How much control you can keep without creating a shadow director
The natural instinct is to appoint a nominee who just signs while the real decisions happen offshore. The problem is that the Act looks through the arrangement. If the board is accustomed to acting on the instructions or wishes of someone who is not formally a director, that person is treated as a director under s 9AC, with the same duties and potential liability. The founder who thought they had avoided the paperwork can end up as a shadow director with none of the protections built around the nominee.
Practical controls keep the arrangement clean:
- Nominee agreement: A written agreement defining what the nominee can and cannot do, approval thresholds, fees, confidentiality and termination.
- Board procedures: Agendas and papers circulated in advance, and minutes that record the information provided and the reasoning behind decisions.
- Dual authorisation: Two signatories for payments and an authority matrix for contracts, so no single person, nominee or otherwise, binds the company alone.
- Execution mechanics: Under s 127, a company document is validly executed by two directors, or by a director and the secretary. If the nominee is one of two directors, expect to need two signatures unless the constitution or a delegation says otherwise. A sole director who is also the sole secretary can execute alone.
These controls belong in the constitution, the board charter and the delegations as well as the agreement, so that they bind the company and are visible to every director, not just the nominee.
Factor 4: The protection the nominee will need
A professional nominee is taking on real liability, and the fee reflects it. The standard protection stack includes a deed of access and indemnity, directors' and officers' insurance, and the underlying governance documents. There are legal limits on how far the protection can go:
- Indemnity limits: A company cannot indemnify a director against a liability owed to the company itself, a pecuniary penalty, or a liability that did not arise from conduct in good faith (s 199A).
- Insurance limits: A company cannot pay a premium that covers a wilful breach of duty or a contravention of s 182 or s 183 (s 199B).
- Policy fit: D&O policies carry exclusions and notification duties, and the policy should be reviewed against the deed of access and indemnity so the two fit together.
If a provider's standard terms are thin on indemnities and insurance, treat that as a risk flag rather than a discount.
Factor 5: The ongoing cost and the exit
Banks and service providers run know-your-customer checks on every director, the nominee included, so expect identity verification at account opening. Fees are typically a fixed annual amount covering compliance and board attendance, with additional charges for ad hoc work. The more the nominee signs and the more meetings they attend, the higher the price, so factor in the D&O premium and an annual governance review.
Plan the exit at the same time as the appointment. A director may resign by giving written notice to the company, under s 203A, and the members of a proprietary company may remove a director by resolution, under s 203C. The company must keep ASIC's records current, and the practical list is longer: bank mandates, signing authorities and system access all need to change the day the nominee leaves, or the company is left with an authority gap. For public companies, financial benefits to related parties, which can include directors, need member approval under Chapter 2E (s 208). For proprietary companies, loans and transactions with a director still engage the duty to act in the company's best interests, so document them on arm's length terms.
How an Artificer Legal lawyer helps you make the call
A lawyer's value here is mostly in the questions asked before the paperwork starts. An Artificer Legal lawyer would stress-test the assumption that a nominee is needed at all: whether someone in your existing team could serve as the resident director, whether incorporation could wait, and whether the proposed nominee genuinely satisfies the residency requirement on the facts. They would model the downside, mapping who is actually making decisions and whether anyone in the structure risks being treated as a shadow director, and how the nominee would discharge their duties in practice.
If the nominee path is right, the lawyer drafts the documents it needs: the constitution, the nominee agreement, the deed of access and indemnity, the resolutions and the delegations, and coordinates the D&O policy with the indemnity deed. When the arrangement ends, they run the exit: the resignation or removal, the ASIC lodgements, and the updates to bank mandates and signing authorities. The same work also applies if you choose the internal appointee path, because that person carries exactly the same duties and needs the same support.
The decision is about governance, not paperwork
The thing people forget is that a nominee is a real director, so the decision is never really about finding a name for the form. It is about whether you are prepared to run the board like a real board: information circulated, decisions minuted, authority limits enforced. If you are, a nominee is a clean, temporary bridge. If you are not, you get the worst of both worlds: a nominee holding duties they cannot discharge, and an offshore founder exposed as a shadow director without any of the protection built around the appointment.
Remember that the residency rule in s 201A is why the question arises at all, that the nominee, the internal appointee and the delayed incorporation are the three workable paths, and that the duties in ss 180 to 183 apply from day one. The business judgment rule rewards process, shadow directorship is the main structural risk, indemnities and insurance are limited by ss 199A and 199B, and the exit should be planned with the same care as the appointment. If your circumstances are unusual, that is the moment to speak to a lawyer.