Checklist of background checks for company directors

23 July 2021 10:19

Michelle Wibisono
Senior Legal Writer, Practical Guidance – Corporations Module

Conducting background checks of proposed directors is essential, particularly for ASX-listed companies (and those seeking new listings) and charities, but also as best practice for all companies generally.

[FREE DOWNLOAD] Checklist of background checks for company directors

In this time-saving checklist you will find clear guidance on how to conduct the  types of checks for establishing a baseline for a person’s suitability for appointment as a company director. This includes meeting the requirement of “good fame and character” in ASX Listing Rule 1.1.

For example:

  • Banning or disqualification
  • Bankruptcy
  • Criminal history
  • Material interests
  • Litigation history

Although the requirement for background checks is squarely relevant to listed companies and not-for-profits, best practice indicates that all companies, including unlisted companies, undertake background checks on new and proposed directors.

Depending on the circumstances, the company should consider which checks should be undertaken personally and which should be outsourced to a third-party service provider.

There may be additional factors which may need to be considered as part of determining whether the person is suitable for appointment as a company director.

Once Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2020(Cth) commences (which should be no later than 22 June 2022), the background checks should also include a person’s Director Identification Number.

This checklist is available inside Practical Guidance Corporations, a module which provides fast answers for lawyers working on matters involving company law, corporate governance, share transactions, mergers and acquisitions, insolvency, etc.

Learn more about Practical Guidance Corporations HERE.

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