The legal burden of being a director in Australia

Australian directors operate in one of the most complex and high-risk legal environments in the world. 

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ew research commissioned by the Australian Institute of Company Directors (AICD) and conducted by law firm Allens shows that compared to key comparator jurisdictions, Australia remains the “high water mark” for director liability in six out of 10 legal areas assessed. Taken as a whole, none of those jurisdictions match Australia’s level of director liability.

The findings update a 2019 comparative study which assessed director liability across Australia, Canada, Hong Kong, New Zealand, the UK and the US.¹ While the earlier analysis covered 10 areas of law – from corporations to workplace safety – the 2025 update expands into fast-moving domains such as cyber security, financial accountability and mandatory climate reporting.

The results are sobering: Australian directors remain exposed to broader, harsher and more complex settings than international peers. While it reflects a strong commitment to corporate accountability, it also risks stifling innovation and strategic leadership.

Australian directors face a unique legal burden

Allens’ legal assessment reveals that Australia stands alone in imposing higher personal liability on directors in areas such as corporate law (breaches of directors’ duties), taxation (e.g., company tax offences), and environmental law (company contraventions). In other areas - cyber security, consumer protection and financial accountability - Australia ranks equally highest among its peers.

Even in domains where Australia is not the most stringent, directors still face significant obligations. These include health and safety, superannuation, sustainability and competition law. The cumulative effect is a regulatory landscape that is more complex and punitive than in comparable jurisdictions.

Even ASIC Chair Joe Longo has acknowledged that, “The more complex the regulation, the harder it is to understand and comply with it. And the harder it is to enforce”² - highlighting that the burden affects not only diligent directors trying to interpret their obligations, but also the regulators tasked with upholding them.

Implications in the boardroom

The combined effect is a regulatory environment that skews board attention away from growth and productivity, and toward compliance and risk avoidance. Directors are expected to navigate overlapping obligations across federal, state and local levels, at a time when Australia faces pressing economic and strategic challenges.

In this context, the balance has been lost - diligent directors should not be forced to choose between compliance and a growth focus. We need a regulatory regime that supports both - recognising the importance of accountability, while enabling boards to drive innovation, strategy and long-term value creation.

AICD supports proportionate, globally competitive policy settings, while also equipping directors with the tools and knowledge to navigate the current environment.

Key legal insights

The research highlights several key takeaways:

• Unique legal risks: Australian directors face more legal risks and heavier penalties than their international counterparts.
• Regulation via director liability: Australia continues to regulate corporate behaviour through director liability provisions, adding layers of responsibility beyond the directors’ duties framework in the Corporations Act.
• New governance responsibilities: Directors are now responsible for compliance in areas like sustainability reporting, modern slavery and critical infrastructure security.
• Emerging issues, greater exposure: Obligations and expectations around cyber security and climate reporting are more extensive in Australia than elsewhere.
• Enforcement intensity: Criminal liability is more readily applied to directors in Australia, often with harsher penalties, despite the national COAG principles suggesting such measures be reserved for exceptional cases.
• Unique legal mechanisms: Australia’s public enforcement system and legal precedents allow regulators to pursue directors even if they were not directly involved in a contravention.
• Cultural accountability: Directors can be held liable for organisational culture failings under Australia’s unique corporate criminal responsibility mechanism.

The case for reform

The AICD believes reform is essential to rebalance the system. While director accountability remains appropriate, the AICD advocates for a regulatory framework that is proportionate, globally competitive, and fit for purpose.

A more balanced, risk-based approach is needed - one that empowers directors to drive performance, while maintaining robust governance standards.

In submissions to the Productivity Commission and the Economic Reform Roundtable, the AICD has outlined key recommendations:

• Limit new liability provisions: Avoid introducing new director liability laws unless clearly justified, recognising that existing duties are already broad and flexible.
• Streamline regulation: Align and simplify regulatory requirements across jurisdictions to reduce duplication and complexity.
• Support productivity and innovation: Ensure regulation enables business growth while managing risk, rather than focusing solely on edge-case scenarios.

This research from Allens will continue to inform AICD’s advocacy to government, particularly given the renewed focus on regulatory complexity and how it acts as a handbrake on productivity and economic growth.

The new research, together with an AICD statement summarising the findings, is available here.