The Corporations Act 2001 (Cth) imposes a number of duties on the directors and senior officers of a company. Most notably they include the duties to:
- exercise powers and duties with the care and diligence that a reasonable person would have which includes taking steps to ensure the director or officer is properly informed about the financial position of the company and ensuring the company doesn’t trade if it is insolvent;
- exercise powers and duties in good faith in the best interests of the company and for a proper purpose;
- not to improperly use a position to gain an advantage, or to cause detriment to the company;
- not to improperly use information obtained through the director or senior officer’s position to gain an advantage, or to cause detriment to the company;
- not to trade while insolvent and a positive duty to prevent the company from trading if it is insolvent. A company is insolvent if it is unable to pay all its debts when they are due. This means that before a company incurs a new debt, its directors must consider whether they have reasonable grounds to suspect that the company is insolvent or will become insolvent as a result of incurring the debt; and
- to ensure that the corporation keeps adequate books and records. A company must keep adequate financial records to correctly record and explain transactions and the company’s financial position and performance. The failure of a director to take all reasonable steps to ensure a company fulfils this requirement contravenes the Corporations Act.
Rowe Bristol Lawyers has extensive experience in dealing with disputes that arise from alleged breaches of director’s duties. This includes providing legal advice and services to:
- Company directors in respect of their legal rights and responsibilities;
- Companies and shareholders who may have concerns about the conduct of a particular director; and
- Liquidators who are investigating the affairs of company after it has become insolvent.
If you require legal advice in relation to director’s duties, please do not hesitate to contact us to arrange a meeting so that we may consider your specific circumstances.
The above information is provided as general information only and should not be relied upon as legal advice. The accuracy of this information may have changed from the date when it was published.