Can you be a director of a company while bankrupt?

An undischarged bankrupt is generally prohibited from acting as a director of a company without the permission of the court.  This restriction is outlined in Section 206B of the Corporations Act 2001 (Cth).

To obtain permission to act as a director while bankrupt, an individual would need to apply to the court and provide compelling reasons for their involvement as a director. They would need to demonstrate that their involvement is in the best interests of the company and its creditors, and that there are no conflicts of interest or potential risks.  It is extremely rare that the court will allow someone to be a director, however, one situation where this may occur is if someone is a director of a company which is trustee of and manages their self managed super fund.

Personal Insolvency Agreements – Can you be a director?

You also cannot be a director if you are subject to a Personal Insolvency Agreement under Part X of the Bankruptcy Act 1966 (Cth).

However, you can be a director again once all the terms of the agreement have been fully complied with.  A Personal Insolvency Agreement can go for a much shorter period of time than bankruptcy (which generally goes for three years) so this may be an option if it is necessary for you to be a company director in the future.

Contact us for assistance

Ensure to speak to a qualified professional prior to declaring bankruptcy. The team at Pearce & Heers is led by registered bankruptcy trustees who will be able to advise you on the risks of bankruptcy. Depending on your circumstances, we may even be able to provide a solution that avoids bankruptcy.

So, contact our Brisbane or Gold Coast offices today for a free no obligation consultation to discuss you circumstances.


We’re happy to answer any questions you may have, so please don’t hesitate to call us and schedule a consultation.



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Brisbane Qld 4000


Phone: 07 3221 0055
Fax: 07 3221 8885

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Brisbane Qld 4001



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Bundall Qld 4217


Phone: 07 5630 1179
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