This document is rules for governing directors.

Directors and officers

A director is a person who is appointed to the position of director. This can include the following:

• appointed directors;
• governing directors;
• nominee directors;
• alternate directors;
• associate directors;
• de facto directors and shadow directors; and
• executive, non-executive and independent directors, including managing directors and chairmen.

Generally, the process for appointing directors is governed by the company's constitution. The constitution may give the general meeting power to appoint directors, and may also confer power on the directors to fill casual vacancies and appoint additional directors. A public company must have at least three directors (not counting alternates). A proprietary company must have at least one director.

Rules governing directors

The constitution of the company will often name the first governing director or governing directors and, in addition, will prescribe for them a very broad range of rights and powers. Typically, their tenure of office is for life, with the power to nominate their successor. Further, they will virtually always have vested in them the right to manage and control the company, including the power to appoint and remove other directors at will and to determine the powers, duties and remuneration of those other directors. Their powers can only be altered by extraordinary resolution. An extraordinary resolution could, for example, entail:

• a resolution passed by a majority in number of members present and voting, being a majority whose shares have voting rights in aggregate of not less than 75% of the total voting rights of that class entitled to vote (whether present or not);
• a resolution passed by a specified majority of each class of issued shares in the company; and
• a resolution passed by 75% or 90% of votes cast on the particular resolution by persons present and entitled to vote.

The practice of appointing governing directors has diminished over the years, particularly with the ability of proprietary companies to be formed with only one director (according to section 201A of the Corporations Act 2001(Cth) (Act)) although it has not yet been abolished in Australia.

When the company chooses to have a governing director, the company must adopt rules for the governing director.

For a public company, compare section 203D of the Act.

Related documents

• Rules providing for removal and appointment of nominee directors
• Rule providing for appointment by general meeting
• Rules for alternate directors

Rules for nominee directors

This document has been updated for LexisNexis by Jane Garber-Rosenzweig, Partner, Gable Lawyer. Previous versions of this were authored by Kate Mills, Peter Richard, Robert D Jeremy, Robert M A Mangioni, Kathleen H Clothier and Amanda Beattie.

This document is prepared with the assistance of Specialist Editors Karen Lee and Geoff Geha.