Background checks are an essential part of the hiring process for any company, but they are especially important when vetting a potential candidate for a director-level position.
From strategic planning and decision-making to budgeting and resource allocation, directors have an immense amount of responsibilities occupying their schedules. As such, they need to be qualified to fulfil their duties and have the company’s best interests as their priority. This means a director must have no conflicts of interest as they complete their assignments, refraining from activities such as self-dealing or exploiting privileged information for personal gain.
The best way to ensure that the director is suited for their role is to consider undertaking directorship and business interest checks. These checks will allow for a comprehensive assessment of any potential candidates, enabling companies to gain valuable insight into the background of their future directors.
Here’s what you need to know.
What is a Directorship Check?
A directorship check is a comprehensive pre-employment screening of an individual’s prior and current directorships in Australia and abroad. This check provides an up-to-date overview of the person’s roles as a director or officer within different companies.
The check can confirm the individual’s identity, past affiliations, and any potential conflicts of interest or irregularities in their past. It can also provide insight into their experience in different industries, lending additional credibility and reputation to their profile.
You can typically conduct the search through the Australian Securities and Investments Commission (ASIC).
With this information, it is possible to uncover critical details such as:
- Previous employment as a director of a company
- If they still hold active roles as a shareholder or officeholder at another organisation
- At what type of company have they previously worked
- With what size businesses they have been involved
- Whether they have been associated with high-risk activities, such as money laundering or fraud
- If any outstanding liabilities could be relevant to your business
Why Should You Carry Out a Directorship Check?
There are three main reasons you should consider including a directorship check as part of your background screening framework.
1. Minimises Potential Conflicts of Interest
A directorship check can minimise potential conflicts of interest, such as when a candidate has current or past directorships or shareholdings in other companies. This helps protect the company from any legal or financial repercussions that may arise from a lack of awareness of these relationships.
2. Provides Insight Into a Candidate’s Experience
Carrying out a directorship check can provide insight into a candidate’s experience in managing companies, allowing the business to verify their expertise before hiring them. Knowing that the potential director has prior experience in the role can provide further assurance and confidence in their capabilities.
3. Uncovers Previous Associations
Directorship checks can help companies uncover if a candidate may have been associated with any companies that have gone into administration, declared bankruptcy, or were deregistered for any reason.
This allows businesses to gain greater insight into any risks associated with appointing a particular individual as a director and provides an opportunity to consider all factors involved before committing to them.
What is a Business Interest Check?
A business interest check is an essential step in recruitment for many high-level positions, such as business consultants, managers, directors and banking services. This type of check involves obtaining details from ASIC that provide information about any companies, positions held, dates of appointment and registration/licensee details.
This check aims to identify whether an individual’s involvement in other businesses might create a conflict of interest.
This check is usually used in conjunction with directorship checks. It offers the same benefits, including gaining insights into an applicant’s external affiliations and providing assurance that the candidate is not connected to any competing businesses or organisations.
Directorship and Business Interest Check FAQs
1. When Should You Conduct a Directorship and Business Interest Check?
Typically, you should conduct the check towards the later stages of the hiring process, after the candidate has been selected for an interview and deemed a strong potential fit for the role.
2. Can You Conduct a Directorship of Business Interest Check Without Candidate’s Knowledge?
In most cases, you should only conduct a directorship and business interest check with the candidate’s knowledge and consent. In fact, you should obtain the candidate’s permission before performing any type of background check to protect their privacy and comply with relevant legal considerations and regulations.
3. What Other Background Checks Should I Do?
In addition to a directorship check and a business interest check, there are several other background checks that you should consider when looking to fill the director position at a company. Some of these checks may include the following:
- A criminal record check: This check can help to identify any past criminal convictions that the candidate may have.
- An employment history check: This check can help verify the candidate’s employment history and ensure they have the necessary experience and qualifications for the position. It also helps to identify any gaps in employment that may need discussing during the interview process.
- A bankruptcy check: In some cases, it may be appropriate to conduct a bankruptcy check on the candidate. This can be especially important for positions that handle sensitive financial information or manage the company’s finances.
- A reference check: A reference check can provide valuable insights into the candidate’s professional abilities and work ethic. Speaking with previous employers, supervisors, and colleagues is crucial to understand the candidate’s skills and potential fit for the position.
- APRA Disqualified Register check: this register contains the names of individuals disqualified from performing specific roles within APRA-regulated industries, such as general insurance or superannuation, due to their conduct or behaviour.
- ASIC Banned and Disqualified check: This register lists all individuals who have been banned by ASIC from performing certain functions or holding specific roles within various industries. Accurate Australia will always carry out this check as part of it’s Directorship and Business Interest check as it’s vital to confirm that any candidate being considered for a directorship role has the legal entitlement to be employed for that purpose.
Implementing various background checks as part of your overall screening framework ensures that you are hiring the best-qualified candidates who are legally eligible and have the necessary skills and abilities to perform the job effectively.
4. Should I Employ the Services of a Screening Agency
Yes, screening agencies, such as Accurate Background, are experts in conducting background checks and have extensive experience in this area. They can help you identify the appropriate background checks to perform for your specific hiring needs and can provide valuable insights and guidance throughout the process.
Conducting directorship and business interest checks as part of your hiring process is an important step. It helps to ensure you are hiring the best-qualified candidates with no conflicts of interest that could interfere with their ability to perform their duties effectively.
These checks can protect your company’s interests, comply with legal requirements, and support fair hiring practices. While conducting these checks can be time-consuming and complex, there are many benefits to using a screening agency with expertise and experience in this area.
By partnering with a reputable screening agency, such as Accurate Australia, you can save time and resources and get the most accurate and up-to-date information about the candidate’s qualifications and background.