The Corporations Act 2001 is a 3,354 page document, split into five volumes.
It is administered by the Australian Securities and Investments Commission (ASIC), who are tasked with ensuring companies, schemes and various individuals and entities meet their obligations.
Company director duties and liabilities fall under The Corporations Act 2001.
What does the Corporations Act 2001 do?
The Corporations Act 2001 sets out the way a company must run in order to be compliant with the law. It deals with regulatory compliance, the behaviour of corporates, directors' duties and reporting.
Who does the Corporations Act apply to?
The Corporations Act mostly applies to companies operating in Australian, but also can apply to other entities, such as partnerships and investment schemes.
What are company director’s duties under the Corporations Act?
For the most part, directors' duties fall under the Corporations Act 2001 which sets out the way in which the company is run – that is, proper financial accounts, decisions being made with due care and diligence and in good faith, no improper use of a director's position or information, and providing strategic guidance.
However, there are also a significant number of federal, state and territory laws which make directors liable for the actions of their companies. For example, directors can be liable if a company does not pay its taxation or causes environmental damage. Some of these laws may be quite obscure and of little interest to most organisations but many of them affect virtually every business. Directors must be aware of company activities and the legal environment in which they operate.
Director duties under the Corporations Act 2001 include, but are not limited to:
Care and diligence - exercise their powers and discharge their duties with the care and diligence that a reasonable person would have if they were a director of a company in the company’s circumstances and occupied the office held by, and had the same responsibilities as, the director.
Good faith - exercise their powers and discharge their duties in good faith in the best interests of the company and for a proper purpose.
Improper use of position - not to improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company.
Improper use of information - not to improperly use information obtained through your position to gain an advantage for themselves or someone else, or to cause detriment to the company.
Disclosure - material personal interests must be disclosed in a wide range of circumstances.
Insolvency - prevent insolvent trading by the company.