Director Exit Agreement Template for Australia

A Director Exit Agreement is a comprehensive legal document that governs the departure of a director from an Australian company. You'll use this agreement to formalize the resignation process, establish final entitlements, and set ongoing obligations for both parties. The document ensures compliance with the Corporations Act 2001 (Cth) and protects your interests whether you're the departing director or the company.

When do you need this document?

You'll need a Director Exit Agreement whenever a director is leaving your company, regardless of the circumstances. This includes voluntary resignations, retirement due to age or health, removal by shareholders, or departures following disputes or performance issues. The agreement is particularly crucial for listed companies subject to ASX requirements, where director departures must be properly documented and disclosed. You'll also use this document when a director holds multiple roles within the company group and needs to resign from all positions simultaneously. If the departing director owns shares, stock options, or has ongoing contractual obligations, this agreement becomes essential for managing the transition and preventing future disputes.

Key legal considerations

Your Director Exit Agreement must address several critical legal elements to be effective. The resignation clause should specify the effective date and confirm departure from all positions across the company group, including subsidiaries and related entities. Financial entitlements require careful calculation, covering final remuneration, accrued leave, superannuation obligations under the Superannuation Guarantee (Administration) Act 1992, and any bonus or incentive payments. Share and option treatment must comply with the company constitution and any existing shareholder agreements, addressing transfer restrictions, valuation methods, and buy-back procedures. Confidentiality provisions should protect sensitive business information while allowing reasonable disclosure obligations. If including restraint of trade clauses, ensure they're reasonable in scope, duration, and geographic area to remain enforceable under the Competition and Consumer Act 2010.

Legal requirements in Australia

Australian law imposes specific requirements for director departures that your agreement must address. Under the Corporations Act 2001, you must notify ASIC of the director's resignation within 28 days using Form 484. The agreement should confirm the director's ongoing duties regarding confidential information and potential conflicts of interest, even after departure. For listed companies, ASX Listing Rules require immediate disclosure of director changes to the market. If the director was also an employee, you must comply with Fair Work Act 2009 requirements regarding termination payments, notice periods, and redundancy entitlements. Tax considerations under the Income Tax Assessment Act 1997 may apply to termination payments, particularly for employee-directors receiving golden handshakes or other non-contractual payments. The Privacy Act 1988 governs how you handle the departing director's personal information, requiring appropriate data management procedures. Ensure your agreement includes appropriate releases and indemnities while maintaining the director's ongoing fiduciary duties for pre-departure decisions.