Are you considering allocating a director role at your startup? Here are some useful tips to help you decide.
You may have a number of people helping you at your startup. Should you allocate a director role to all of them?
Short on time? Below is a 33 second summary of the key points.
Below are a few factors you may wish to consider to help you decide.
If your helper will only receive short-term assistance, you may want to rethink allocating a director role. A director is responsible for the operation of a company they need to be across financials they also need to understand how the business is running day-to-day.
You should only allocate director roles to people that are happy to take on the responsibilities of a director.
what does the role of a director entail? You will need to:
Understand your legal obligations;
Keep informed about your company’s finances;
Act in the best interests of the company;
Get professional assistance if needed;
Be aware of how your company is operating; and
Participate in director’s meetings.
In light of the responsibilities of a director listed above, if the people helping you are also working on other projects, other business or are employees elsewhere, You should check the following:
What sort of skill set do you need your director to have? IT, financial, marketing, legal? and will the new director’s skills compliment your existing skill set by bringing something new to the table?
You should know that a director is considered an officer holder and because of this they are responsible for the operation of the company.
You can find out more about the role of office holders on the ASIC website here.
From the work you have seen them complete so far, do you think they will be able to perform the duties of an officeholder?
If you have decided that you need ongoing assistance from a suitable director, you will need to make sure you have the following from your prospect:
You will need a director consent signed before you register the director. You can download a director consent below for your startup.
What’s the nature of the relationship - on-going or short term? This will guide your decision to allocate a director role to people helping you at your startup;
Consider if your prospective director has other responsibilities that may compete; and
Make sure that the director is 18 years or older and that you have their written consent before you register them as a director.