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The Federal Court’s decision in ASIC v Bekier & Ors provides important guidance on the scope of the duty of care and diligence under section 180 of the Corporations Act as it applies in the context of non-financial risk management (for AICD’s early analysis on the judgment, see here).
In a webinar moderated by AICD’s Head of Policy, Christian Gergis GAICD, Dr Pamela Hanrahan MAICD, Consultant, Johnson Winter Slattery, and Priscilla Bryans MAICD, Partner, Herbert Smith Freehills Kramer, examined what the decision means for directors – and what governance lessons we can all take from it.
Why the decision is significant
ASIC’s decision to bring civil penalty proceedings against all non‑executive directors for an alleged section 180 breach relating to non-financial risk management was an important development in the enforcement of directors’ duties.
As Dr Hanrahan noted, Justice Lee ultimately confirmed established legal principles including in relation to the scope of the duty under section 180, director reliance on information and advice, and the importance of the distinction between the role of the board and management – in itself, this confirmation was significant.
What the Court was – and was not – assessing
The panel stressed the importance of distinguishing civil penalty proceedings from broader governance inquiries – noting that this case was not a free-ranging assessment of Star’s governance practices, nor a general examination of its culture. ASIC was required to plead and prove specific breaches of the duty against each officer.
“This was not a free-wheeling inquiry into whether Star was well governed. ASIC had to prove specific failures of care and diligence, without the distortion of hindsight.” – Dr Pamela Hanrahan MAICD
The distinction between accountability and legal liability is important, and the Court’s task was confined to determining whether ASIC proved that the officers’ conduct fell below the statutory standard on the pleaded case.
Expectations of oversight and reliance on management
“Times have changed. Toleration of the languid, listless indifference of gentleman directors of the Victorian and Edwardian ages is a thing of the past. The law now expects significantly more of officers of a corporation in discharging their duties and when delegating to others.” – ASIC v Bekier & Ors at [3]
Justice Lee reinforced that the law now expects “significantly more” from officers when discharging duties and delegating to others, while accepting that non-executive directors can rely on management until, in effect, it is no longer reasonable to do so.
The panel discussed how this works in practice, and what directors should do when they start to doubt the quality of information they are receiving from management.
The panel acknowledged that warning signs can often be subtle: inconsistencies in reporting, unexplained gaps, excessive summarisation, information that does not align with a director’s broader understanding of the business, or signs of affirmation bias.
“Rarely is it the case that an executive will be deliberately trying to mislead you. And they will generally feel like they've given you all the information that's relevant. But remember, this is a very human activity. People do have biases or blind spots. Part of the job of a non-executive director is to think critically about whether things add up. And if it doesn't, just ask some more questions. It's not about distrusting people or trying to create a ‘gotcha’ moment or asking for unnecessary information or proof that creates an undue burden on management. It’s about thinking – given all that I know about the company and the environment in which it operates - does this add up to me?” – Dr Pamela Hanrahan MAICD
While the Court did not find that Star’s non‑executive directors breached section 180, the panel agreed that the judgment does not diminish expected standards of oversight. Boards are not ‘passive recipients’ – they need to exercise active oversight and to bring their experience, judgment and external awareness into the boardroom.
That said, the judgment preserves the important and well-established distinction between the role of non-executive directors and management.
Mission‑critical risk requires sustained attention
“One would hope that someone proposed to be a director of a corporation conducting a high-risk enterprise such as a casino would recognise that they are being asked to guide and monitor the management of the company operating in a singularly high-risk context. Their obligation, after all, is to perform their role at a level of diligence that a reasonable director or officer, acting in the corporation’s specific circumstances would achieve.” – ASIC v Bekier & Ors at [1944]
The judgment reinforces that the duty of care and diligence is highly contextual.
Where risks are inherent to a business – such as anti-money laundering (AML) risks in the context of a casino – directors are expected to understand those risks deeply and exercise sustained oversight.
“As a director, you must be aware of the organisation’s most acute risks. Making sure that the board agenda gives appropriate time to these risks is really important so that it doesn't become just a morass of regulatory compliance.” – Dr Pamela Hanrahan MAICD
The panel emphasised that risk oversight and control settings are not set-and-forget – as Priscilla Bryans observed, boards must continue to probe and question as circumstances evolve. Internal audit functions can play a critical role in supporting the full board (not just audit and risk committees).
“If you run a business with certain inherent core risks like a casino with AML obligations, you have to keep asking questions to satisfy yourselves that control settings are effective.” – Priscilla Bryans MAICD
Risk reporting and culture oversight were also points of discussion, with the panel emphasising the value of triangulating relevant data points (for example, internal audit findings, whistleblower reports and people data (including exit interviews).
The panel also discussed the Court’s findings in relation to the Chief Legal & Risk Officer and Company Secretary role and implications for governance. Executive officers have a responsibility to identify serious risks, address them, and escalate them to the board as appropriate. For company secretaries who hold a joint legal and/or risk role, the judgment reaffirms that officer duties will apply across all aspects of their joint role.
“It is clear that what is required of executives is not just answering the questions the board asks, but bringing to the board’s attention what it needs to know.” – Priscilla Bryans MAICD
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Board papers, AI and information flows
“It is now notorious that the Board pack of a public company no longer arrives as a modest bundle of papers designed to assist judgment; often the packs represent an electronic publishing project. No longer posted or delivered by a bike courier, the document uploaded is often heroically vast.” – ASIC v Bekier & Ors at [384]
Justice Lee’s criticism of board pack size and complexity affirms the long‑standing principle reinforced by various authorities over the years: boards through the chair are responsible for the information they receive.
The panel discussed practical tips for both boards and company secretaries, who play a critical role in information flows to the board – recognising, though, that part of the role of a non-executive director (particularly of large organisations or in highly regulated sectors) is to be across a significant amount of nuanced information.
“One of my favourite board paper structures is: ‘What?; So What?; Now What?’ And the emphasis is on the ‘So What?’, not the ‘What?’. Board papers should never be an information dump with no synthesis.” – Priscilla Bryans MAICD
The panel concurred with Justice Lee’s observations on the potential use of AI to assist with comprehension, while noting it must not displace independent judgment and individual diligence.
“AI may help with prioritisation, but directors are taken to have read everything they receive. It does not replace human judgment.” – Priscilla Bryans MAICD
Minutes and evidencing oversight
“…The contemporaneous minutes disclose little by way of sustained scrutiny or insistence upon explanation in circumstances where risks were obvious.” – ASIC v Bekier & Ors at [1951]
The panel fielded several audience questions on the appropriate approach to board and committee minutes.
Both panellists agreed that excessive detail is undesirable. Minutes are primarily a record of board decisions and the process by which the decisions are made. Minutes should not represent a comprehensive report or transcript of the discussion or debate during the meeting, or a personalised record of challenge.
Once adopted and signed, minutes become the authoritative record. Directors should review them carefully and ensure they accurately reflect discussion and outcomes.
“Once the chair signs the minutes, they become the truth. Directors should check them really carefully, in advance of the next meeting. If there's something that you feel uncomfortable about or that in your view didn't really capture where the board landed, correct it then. Because five years down the track, what it says in the minutes is evidence of what actually happened.” – Dr Pamela Hanrahan MAICD
Key takeaway
Overall, there was consensus on the panel that the Star judgment can be read as precedent – but also as a parable. It reinforces that effective oversight requires sustained curiosity, disciplined focus on risk, and constructive challenge of management – supported by clear information flows and role clarity.
To register for a recording of the webinar and hear more insights from the panellists, click here.
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