Do Not Breach Your Duties As a Director Of A Company
Are you a director of a company? Or are considering becoming one?
We understand that you are in a senior position – but don’t forget this comes with many responsibilities.
Many directors in the past have turned a blind eye and thought they could get away with not complying with their duties, but ultimately when the chickens finally came home to roost, they found themselves facing serious consequences including up to 5 years jail time, criminal and civil penalties and fines of up to $200,000.
In more serious situations, directors have also been disqualified from managing their company(s) and still be personally liable for any of the company’s debt.
It is therefore so important for you, whether you are a director of a company or are thinking of becoming one, that you familiarise and comply with the duties required of you.
Four Main Directors’ Duties
There four main duties which you must comply with as set out in the Corporations Act 2001 and they are:
- Care and diligence – as a director of a company you are expected to conduct your business with care and diligence. Your business decisions should be conducted in a way where the interests of the company are not put at risk.
- Good faith – as a director of a company you are expected to act in good faith. You are required to act and behave in a way that is honest and sincere in all your business dealings. You must do your best to avoid any conflict of interest, and if any conflict arises, you should be able to identify it and manage it immediately.
- Improper use of position – as a director of a company you must not improperly use your position for your own personal gain, for someone else’ gain, or in any way which puts the company’s interests at risk.
- Improper use of information – as a director of a company you must not improperly use the information you acquire to gain an advantage for yourself, for someone else’ gain, or in any way which puts the company’s interests at risk.
What happens if you breach these duties?
Serious consequences can come your way if you do not comply with your director duties, ranging from a criminal office, to a heavy fine or even being disqualified from being a director.
But imagine the damage to your company’s reputation if you are found breaching your duties.
Your customers, your investors, and your business partners will no longer trust you.
Your commercial presence in the market may very will diminish as a result of damage to your reputation – you may lose profits and your company may even be forced out of business.
So don’t risk it. Make sure you comply with your duties.