Important information:

Appointing an alternate director allows a current director to appoint another person to fill his/her place as director and perform all the director’s duties and decisions that the current director can perform. This is important when a current director cannot act for any reason such as being overseas for a long period of time or losing legal capacity. It is important to note that a Power of Attorney does not authorise an attorney to act for a director of a company. To overcome this, the person appointed under a power of attorney can be appointed as an alternate director. This way the alternate director can step in if the need arises and the current director can remain as a director.

It is particularly important to appoint an alternate director if a company is acting as corporate trustee for a SMSF. A member of a SMSF must also be a director of the corporate trustee. If one of the members loses legal capacity then they are automatically disqualified as a director and this can result in the SMSF being non compliant causing heavy penalties to be applied. Having an alternate director appointed in place of the director that lost legal capacity can avoid this problem.

The alternate director's exercise of the director’s powers will be just as effective as if the powers were exercised by the current director. The constitution of the company will generally govern the process for appointment, the alternate director’s powers and the process of terminating an alternate director’s role.