Corporate Governance & Directors Duties

Our Senior Corporate & Commercial Lawyers have the expertise to deliver the advice and outcomes you need and pride themselves on their proactive approach to helping Company Directors manage their statutory obligations and duties.

The responsibilities and regulatory obligations of Directors and other Company officers are significant. Failing to understand these rights and obligations can lead to inadvertently breaching an obligation, liability to the company or its shareholders for breach of a directors’ duty or even large fines or imprisonment.

Corporate Governance

Our experienced Company Lawyers offer support and guidance on Corporate Governance issues, including:

• directors’ duties, liability and protection,
• composition of the board of directors and board procedures,
• preparation and assistance with circular resolutions,
• related party transactions,
• changes to share capital (including capital reductions and share buy-backs),
• fundraising and disclosure regulation,
• voluntary deregistration and winding up processes,
• legal structures including corporations, joint ventures, trusts and partnerships,
• corporate structures & restructures,
• reporting requirements and general meeting procedures,
• obligations to shareholders, ASIC and other regulatory bodies,
• disputes with directors and/or shareholders, and
• crowd-sourced funding (crowdfunding) and related Agreements. 

What are Directors’ Duties?

Directors are generally responsible for running the day-to-day activities of a company, including its business. The duties owed by Directors to a Company extend beyond the normal fiduciary duties of a senior employee to an employer as the Corporations Act and relevant WH&S legislation, impose legal obligations upon Directors, including:

• ensuring proper financial records are kept,
• ensuring the company can pay its debts and does not trade whilst insolvent,
• understanding what the company is doing at all times,
• acting in the best interests of the company,
• acting in good faith and for a proper purpose,
• not improperly using their position to gain an advantage for themselves or cause detriment to the company,
• not improperly using information gained from their role, and
• ensuring compliance with Work Health & Safety Laws, including the due to exercise due diligence.

A Company’s Constitution and Shareholders Agreement can also provide additional responsibilities upon Directors.

It is important that every Director is aware of their legal obligations so they can be properly discharged to avoid personal liability.

What happens if a Director breaches their duties or obligations?

If a Director is found to have breached their duties or obligations the director may be personally liable for damages, fines, or ATO Director Penalties. Directors also risk prosecution under the Work Health & Safety Act and even gaol time depending upon the severity of the breach.

Directors can also be personally liable, including liable for the debts of the Company, in other circumstances such as if the:

• Company trades whilst insolvent,
• Company fails to pay its withholding tax, GST or superannuation guarantee liabilities,
• Director signs a personal guarantee, or
• Director engages in misleading or deceptive conduct.

Given the severity and real risk of personal liability, every person who is, or is thinking of becoming, a Director should seek legal advice to understand and manage the significant legal obligations and duties of Directors.

Our Company Lawyers