Officeholders - Choosing the correct set up for a new company
Officeholders? Wait. What?
Are you wondering what an officeholder is for your business incorporation?
Unless you’ve been in business before, it’s not something you would have come across previously.
But, as always, we’ll explain in easy-to-understand terms, so choosing your officeholders is made with confidence. We promise!
Let’s start slowly – what is an officeholder?
Officeholders are accountable for the day-to-day operations of the company. The officeholders’ duty is to follow the Corporations Act by keeping company details up to date, ensuring company records and details are registered with ASIC, and annual reviews are lodged and paid.
Each appointed officeholder must be in a position to affect the whole or significant part of the company, including the financial position of the company. Officeholders are responsible roles and ones not to be taken lightly.
Officeholders include Directors of your company, and potentially a Company Secretary or a Public Officer.
Choosing officeholders - the director
Every Pty Ltd company must appoint at least one director and:
- at least one director must ordinarily reside in Australia
- be over the age of 18.
- not be an undischarged bankrupt
Responsibilities of a director
So, what does a director have to do as an officeholder?
A director of your company is in charge of managing the company’s business activities. They must make every business decision in the best interests of the company, with care and diligence.
Directors are required to keep accurate and updated company records. They must inform ASIC of any changes to the company such as changes to shareholders, address, and officeholders.
A director can be a shareholder (member) and make decisions on the board.
They must comply with their duties or face penalties or dismissal if they violate them.
Choosing officeholders - a company secretary
Your Pty Ltd company does not have to appoint a company secretary.
If you decide to appoint a company secretary, they must:
- be over 18 years of age and
- ordinarily reside in Australia.
As an officeholder, a Company Secretary is responsible for legal obligations and administrative tasks of the board. Examples include organising meetings between directors and/or shareholders, the payment of dividend and interest payments, and the drafting and execution of agreements, contracts and resolutions.
Their role is to ensure the company complies with regulations, keep accurate records and manage company affairs.
Same as the Director, a Company Secretary must act in the best interests of the company.
When first starting out, your business may not appoint a company secretary. The Director can fulfil this role.
But as your company grows, you may want to appoint a company secretary to relieve the burden on your Director. The Company Secretary does not need to be employed by the company.
If this is the case, don’t forget to notify ASIC of your new company secretary (within 28 days of being appointed).
Choosing officeholders - a public officer
Oh, what about a public officer?
A public officer is not mandatory to appoint for a Pty Ltd company.
As an officeholder, a public officer is the contact between your company and the ATO. They are the company representative and are responsible for complying with the legislation and liable for penalties should the company not meet these responsibilities.
You can check out Section 252 of the Income Tax Assessment Act 1936 if you are so inclined!
A public officer:
- Must be over 18 years of age and
- Must ordinarily reside in Australia.
- Should understand the role of a public
- officer and tax compliance.
The public officer can be the Director as well.
Wow, that’s a lot of officeholders, isn’t it? We think this calls for some scenarios so you can get a true understanding of choosing officeholders.
In the simplest of company set-ups, you, the founder can be the sole shareholder, director and company secretary. In this instance, you are the officeholder.
Alternatively, you can choose to engage others to take on the role of company secretary and public officer. You, as the founder, can be the sole shareholder and director and you can appoint your employed accountant as the company secretary (such as Sleek!).
Great, choosing officeholders for my company is done, now what?
Once you have decided who your officeholder/s will be, you need to get written consent from them. These signed documents will need to be filed with your company records.
Remember, all directors will need their own unique Director’s Identification Number (DIN).
In 2021, ASIC started requiring Company directors to obtain their own unique Director Identification Number (DIN).
Can you change officeholders?
Sure can. You can change your company officeholders at any time.
But you will have to notify ASIC within 28 days of any changes. There are no fees to make these changes but there are fines if you do not notify ASIC within the time frame.
Your company officeholders are responsible roles and need to be taken seriously. If you are unsure of who to appoint, shoot us an enquiry on our chat box, and we’ll be sure to help clear up any queries you have.