Are you an ordinary resident?

February 2014

Failure to comply with the requirement in the Corporations Act for at least one director of a proprietary company, and at least two directors of a public company, to ordinarily reside in Australia may result in a penalty notice or prosecution by the Australian Securities and Investments Commission (ASIC). Lawyer Kristy McCluskey warns directors to take care when portraying themselves as being ordinarily resident in Australia.

Ordinary residence

The term 'ordinarily reside' is not defined in the Act and ASIC has not provided any guidance on what criteria must be fulfilled for a director to satisfy this requirement.

While the concept of 'ordinary residence' has been considered in numerous cases, it has not been considered in many cases relating to the Corporations Act requirement. Where this requirement has been considered, the director's failure to reside in Australia was relatively obvious (e.g., having an American address for service) and the court has not been required to delve any deeper into the issue of residency requirements.

Ordinary residence has mostly been considered by the court for the purpose of revenue laws and bankruptcy. Accordingly, it is useful to consider these laws when attempting to establish what a director may need to demonstrate when attempting to establish Australian residency.

Foreign Acquisitions and Takeovers Act

The application of the Foreign Acquisitions and Takeovers Act (FATA) to the question of residency is particularly useful, given its relevance to foreign investment, commercial transactions and national policy, all of which play a role in the successful directorship of Australian companies.
FATA provisions deal, in part, with natural persons who are not Australian citizens, yet are ordinarily resident in Australia at a particular time. The person is considered to be ordinarily resident if—

  1. they have actually been in Australia during 200 or more days in the prior 12 months, and
  2. at the time in question, either—
    • the person is in Australia, and their continued presence in Australia is not subject to any time limitation imposed by law, or
    • the person is not in Australia but, immediately before their most recent departure from Australia, their continued presence in Australia was not subject to any legal limitation.

Bankruptcy Act

The Bankruptcy Act (Bankruptcy Act) allows for a debtor to have their possessions forcibly taken in order to pay their debts or satisfy other claims, such as where a director is held personally liable for the debts of their company. However, the person must be personally present or ordinarily resident in Australia. The Bankruptcy Act does not define the term 'ordinarily resident but, unlike the Corporations Act, it has been reviewed extensively by the court. These cases have led to the adoption of the following criteria when establishing residency:

  1. The degree of permanence of the person's residence in Australia (rather than a place where the individual stays only casually).
  2. Where the ordinary course of the person's life regularly occurs.
  3. Whether the person has a dwelling in Australia.
  4. If the person has left Australia, how long they intend to spend outside Australia.
  5. Whether there are employment arrangements creating a link between the person and Australia.

Dual residency

It is also useful to note that an individual can be ordinarily resident in more than one country at the same time. Some people regularly or customarily live in more than one place, each of which has an element of permanence about it and is not merely a place of casual or intermittent resort. This may be especially applicable to a director whose company maintains business and international networks across several countries.


In summary, whether a director is ordinarily resident is a matter of fact and degree. However, a director should give careful consideration to the above factors when portraying themselves as being ordinarily resident in Australia.