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The role of being a director of a company is clothed with a myriad of responsibilities and obligations. These duties and obligations are derived from statute, common law and statutory bodies such as the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC). The powers of an executive or manager are defined by contract and agreement, and this includes powers, duties, obligations and the ability to bind the company as an agent. Directors are fiduciaries that exercise managerial duties which are not subject to review by a general meeting, and in this manner they exercise discretion. These fiduciary duties include a duty to act bona fide in the best interests of the company as a whole, to act for a proper purpose, to avoid conflicts of interest and to exercise due care and diligence.  There may be harsh and severe penalties for breach of these duties. Our team of highly skilled Asset Protection/Trusts and Commercial Lawyers may be able to assist you in advising you of the potential liabilities that are applicable to directors so that you can properly discharge your obligations as an executive or manager.

Firstly, as an executive or manager you have duties to creditors that need to be fulfilled. Although a corporate entity has limited liability there is ample authority that enunciates the principle that directors must take into account the interests of creditors as a whole. It is also an offence to trade whilst insolvent and a breach of directors’ duties in doing so. Recent updates in the law mean that creditors/shareholders have increased recourse against directors who disregard their creditors and breach their duties in this regard. Proper legal advice from a Commercial and Corporate Lawyer may be required to ensure that you do not breach any liabilities in relation to creditors.

In addition, there are various disclosure requirements in terms of meetings, reporting of financial performance and of director’s interests and benefits conferred to related parties. Any resolutions need to be appropriately documented and reported to the required parties, which for public companies may mean the general public. In terms of reporting, annual reports, director’s reports and declarations and financial information disclosure may also be required. Consultation with an experienced Commercial and Corporate Lawyer may provide assistance to ensure that you don’t breach any disclosure obligations. 

There are various civil penalties as well as criminal penalties for breach of director duties. These duties include not to improperly obtain an advantage for yourself, not to use information gained from your position to cause detriment to the company and to keep proper books and records. The penalties may include investigations by ASIC, statutory remedies instigated by members and fines or criminal liability. It is important that proper legal advice from a skilled Commercial and Corporate Lawyer should be obtained to ensure compliance with the relevant laws to avoid fines, penalties and other retribution.

If you need further legal advice on your matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email at info@navado.com.au. 

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This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.

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