AustraliaHow does bankruptcy affect my capacity to be a director of a company?
If you are bankrupt in Australia, you cannot act as a director of a company or take part in its management without court permission for the duration of your bankruptcy — usually three years.
What the Law Says
The Corporations Act 2001 (Cth) sets out strict rules about who can serve as a company director in Australia. Bankruptcy triggers automatic disqualification — no court order or administrative process is needed to enforce it.
Under section 206B of the Corporations Act 2001, a person is disqualified from managing a corporation — including acting as a director — if they are an undischarged bankrupt.
This disqualification applies automatically and lasts for the entire period of bankruptcy, which is typically three years from the date of bankruptcy commencement, unless extended by the court or trustee.
You cannot be appointed as a director while bankrupt, nor can you act in the management of a company — even informally — without first obtaining written permission from the court under section 206C.
Statutory TextA person is disqualified from managing a corporation if the person is an undischarged bankrupt.
— Corporations Act 2001 (Cth), s. 206B(1)(a) — Disqualification on grounds of bankruptcy
Statutory TextThe disqualification… continues until the person is discharged from bankruptcy.
— Corporations Act 2001 (Cth), s. 206B(3) — Duration of disqualification
What to Do
Confirm your bankruptcy status with your registered trustee or the Australian Financial Security Authority (AFSA).
Do not accept or continue in any directorship or management role while undischarged.
If exceptional circumstances apply, apply to the Federal Court or Supreme Court of a State/Territory for permission under s. 206C before acting.
Once discharged from bankruptcy, the disqualification ends automatically — no further action is required to resume eligibility.
Keep records of your discharge certificate (issued by AFSA) as proof of eligibility to become a director again.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.