Working chairman, the role and the director duties it attracts in Australia

A working chairman, also called an executive chairman, is a company director who chairs the board and stays hands-on in the day-to-day running of the business. In Australian company law the chair is always a director first, so every duty the Corporations Act 2001 (Cth) gives directors applies to them in full, and the "working" part simply adds an executive layer on top.

This article sets out what the chair role actually is under the Corporations Act 2001 (Cth), how a working chairman differs from a non-executive chair, the director duties that apply regardless of how the role is described, and the misconceptions that cause the most trouble in practice.

What a working chairman is

There is no separate legal office called "working chairman" or "executive chairman" in Australian law. The Corporations Act 2001 (Cth) recognises directors, and among them a chair of the board. Under s 248E, the directors may elect one of their own number to chair their meetings and may set the period for which they hold the role. A chair is therefore always a director first, and "working" describes how much they do beyond the boardroom.

In practice a working chairman is usually someone who:

Is involved in operations: makes management decisions, leads projects, or represents the company day to day.
Works close to full time: commits hours that look more like an executive role than a director's role.
Is paid as an executive: draws a salary under an employment or service agreement rather than director fees alone.

The terms "working chairman" and "executive chairman" are used interchangeably in Australian practice. Both describe the same arrangement: a director who chairs the board and also works inside the company.

Working chairman versus non-executive chairman

A non-executive chairman attends board meetings, keeps the discussion moving, and acts as a sounding board for the CEO, but does not take part in day-to-day management. A working chairman does all of that and more: they may step in as acting CEO while one is recruited, drive particular projects, mentor the management team, or lead major negotiations with customers and suppliers.

The difference matters legally because of what it adds. A non-executive chair's exposure is mostly confined to director duties. A working chairman carries those same duties and, on top of them, the obligations that come with being an executive: an employment or service contract, employment-law obligations, and personal accountability for operational decisions they make.

The model is rare at listed companies. Principle 2 of the ASX Corporate Governance Principles (Recommendation 2.2) expects the chair of a listed entity to be an independent director, applied on an "if not, why not" basis under Listing Rule 4.10.3. A chair who is also a working executive is by definition not independent, so the working chairman arrangement is effectively a structure for private and unlisted companies.

The director duties that apply regardless

Because a working chairman is a director, the whole of Part 2D.1 of the Corporations Act applies to them. The core duties are:

Care and diligence (s 180): a director must exercise powers and discharge duties with the degree of care and diligence a reasonable person would show in the company's circumstances. This is a civil penalty provision. The business judgment rule in s 180(2) protects decisions made in good faith, for a proper purpose, without a material personal interest, and after reasonable enquiry.
Good faith and proper purpose (s 181): powers must be exercised in good faith in the best interests of the corporation and for a proper purpose. This is also a civil penalty provision.
Use of position and information (ss 182-183): a director must not improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company, and must not improperly use information obtained through their role.
Criminal exposure (s 184): where a breach of these duties is reckless or dishonest, it becomes a criminal offence.
Conflicts of interest (s 191): a director with a material personal interest in a matter relating to the company's affairs must notify the other directors of the interest unless an exception applies. Section 192 allows a director to give a standing notice covering an ongoing interest.

The point to hold onto is that these duties attach to the person acting as an officer, not to a job title. A working chairman who makes a poor operational call cannot answer "that was my management hat, not my director hat". Both hats carry the same statutory duties, and the company's constitution or board documents cannot contract out of them.

The chair-specific mechanics

Beyond the general duties, a handful of provisions shape what the chair can and cannot do in the boardroom:

Election (s 248E): the board elects the chair from among the directors and can set the term. If no chair has been elected, or the chair is unavailable, the directors must elect one of those present to chair that meeting.
Quorum (s 248F): unless the directors decide otherwise, two directors must be present for a directors' meeting, including a meeting chaired by a working chairman.
Casting vote (s 248G): the chair has a casting vote if needed, in addition to their vote as a director, unless the constitution provides otherwise. That casting vote can decide a deadlocked board.
Replaceable rules (s 135): each of these chair provisions is a replaceable rule, meaning a company's constitution can displace or modify them. A constitution can, for example, remove the chair's casting vote or require the chair to be re-elected annually.
Collective power (s 198A): the business of the company is managed by or under the direction of the directors. The board's powers are collective, so a working chairman's authority to make operational decisions comes from what the board has delegated, not from the chair title itself.

There is also a structural limit. Under s 201A a proprietary company needs at least one director and a public company at least three. A single-director proprietary company has no board to chair, because the quorum rules assume at least two directors, so the working chairman concept only makes sense once the company has a functioning board.

The executive layer on top

A working chairman who is employed by the company adds a second set of obligations. An employment or executive service agreement should set out duties, remuneration, restraints, confidentiality, and what happens on exit. If the chair is an employee, the ordinary employment-law framework applies, including the Fair Work Act 2009 (Cth), superannuation guarantee obligations, and workplace health and safety duties to the extent they operate on the business.

Separately, the company must tell ASIC about the directorship. Under s 205B the company must lodge notice of a director's personal details within 28 days of appointment, and s 205A lets a resigning director notify ASIC themselves. The chair role itself is not registered with ASIC; only the fact that the person is a director is. A board charter or role description is not mandatory, but it is the practical tool that records what the working chairman may decide alone and what must come back to the board.

How the role operates: a worked example

Coastal Joinery Pty Ltd is a family-owned manufacturing business. The founder steps back from CEO to become executive chairman while a new CEO takes over the factory floor. The chair keeps two functions: he chairs monthly board meetings and he keeps running the company's largest customer relationship, which the board has formally delegated to him.

The arrangement creates three legal moments worth noticing. First, when the board considers renewing a supply contract with a business owned by the chair's brother, the chair has a material personal interest and must disclose it to the other directors under s 191, and he should not use his position to steer the contract to his brother under ss 182-183. Second, when the board makes a strategic decision that later proves costly, the business judgment rule in s 180(2) protects the chair and the other directors if the decision was made in good faith, for a proper purpose, on reasonable information. Third, when the board deadlocks two-two on a capital purchase, the chair's casting vote under s 248G decides the matter, and the minutes record it.

The example shows the dual nature of the role. The chair is subject to director duties in the boardroom and executive accountability on the factory floor, and the only thing keeping the two layers distinct is the delegation recorded in the board minutes and the chair's service agreement.

Misconceptions that cause real problems

A handful of beliefs about the chair role cause recurring problems in practice. The most common are:

"The chair has special legal powers over other directors": the board's powers are collective under s 198A, and the chair's only statutory extras are procedural, like the casting vote, which is a replaceable rule the constitution can remove.
"ASIC needs to be told about the chair appointment": only the directorship is reported, within 28 days under s 205B. The chair position is internal and set by the board under s 248E.
"My operational work is separate from my director duties": director duties follow the person acting as an officer. A management decision made by a working chairman is still a decision made in the exercise of their powers, and the duties in ss 180-184 apply to it.
"A working chairman is an office you can register or insure separately": it is a description of how a director performs the chair role. The legal role is defined by the directorship, the constitution, and whatever the board delegates.

Each of these misconceptions matters because it tends to surface only after a dispute, a failed decision, or a regulatory question, when the documentation is already thin.

When to bring in a lawyer

The working chairman arrangement is legal to set up, but the boundaries around it are usually the hard part. A lawyer can review the constitution to confirm it does not accidentally remove the chair's casting vote or election process, draft the executive service agreement so the chair's operational duties do not collide with the CEO's, and put together the board charter that records what the chair may do alone. Where the chair has outside business interests, a conflict-of-interest policy and a standing notice under s 192 keep the disclosure duty manageable.

Legal advice is also the check on the quiet risks: whether the chair's employment contract accidentally converts director fees into employment entitlements, whether the company's indemnity and directors' and officers' insurance respond to an executive act as well as a board act, and whether the delegation recorded in minutes is wide enough to cover what the chair actually does. Getting these documents settled at appointment is far cheaper than reconstructing them after a dispute.

The decision the role forces on your board

Before anyone takes the chair, the board has to decide in writing whether the role is working or non-executive, because that choice determines the contract, the disclosure obligations, and the exposure. The question worth asking is simple: can the company point to a document that says what the working chairman may decide alone, and what must come back to the board? If the answer is no, the role is defined by habit rather than by design, and that is where the personal liability quietly lives.