If you’re a director, office holder or secretary of a company, you must follow the requirements set out in the Corporations Act 2001 (Corporations Act). The Australian Securities and Investments Commission (ASIC) is the company law watchdog.

As a director, you must:

• be honest and careful in your dealings at all times;
• know what your company is doing;
• take extra care if your company is operating a business because you may be handling other people’s money;
• make sure that your company can pay its debts on time;
• see that your company keeps proper financial records;
• act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons;, and
• use any information you get through your position properly and in the best interests of the company. Using that information to gain, directly or indirectly, an advantage for yourself or for any other person, or to harm the company may be a crime or may expose you to other claims. This information need not be confidential; if you use it the wrong way and dishonestly, it may still be a crime.

If you have personal interests that might conflict with your duty as a director, you must generally disclose these at a directors’ meeting. This rule does not apply if you are the only director of a proprietary company.

If a director is found to breach their duty, ASIC can:

• Commence civil penalty proceedings or alternatively, criminal proceedings where recklessness or intentional dishonesty is apparent; or
• Take administrative action, for example, banning directors, where a particular situation warrants such an approach.

You and any other directors will control the company’s business. Your company’s constitution (if any) or rules may set out the directors’ powers and functions.

You must be fully up-to-date on what your company is doing:

• Find out and assess for yourself how any proposed action will affect your company’s business performance, especially if it involves a lot of the company’s money;
• Get outside professional advice when you need more details to make an informed decision;
• Question managers and staff about how the business is going; and
• Take an active part in directors’ meetings.

You must not act as a director or secretary (or manage a company) without court consent if you:

• are an undischarged bankrupt;
• are subject to a personal insolvency agreement or an arrangement under Part X of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act)that has not been fully complied with;
• are subject to a composition under Part X of the Bankruptcy Act and final payment has not been made; or
• have been convicted of various offences such as fraud or offences under company law, such as a breach of your duties as a director or insolvent trading. If you have been convicted of one of these offences you must not manage a company within 5 years of your conviction. If imprisoned for one of these offences, you must not manage a company within 5 years after your release from prison.

All company officers must make sure that the company attends to some basic ‘housekeeping’ matters. The directors remain ultimately responsible for the company’s compliance with the Corporations Act. When a company is set up, you must:

• register your company name with ASIC and obtain an Australian Company Number (ACN); and
• have a registered office. (If your company doesn’t occupy the same address as the registered office, then you must have written consent from the person who occupies the registered office.)
• Make sure that you:
  o display the company name at every place at which your company carries on business and that is open to the public. Also, a public company must display its name and the words ‘registered office’ prominently at its registered office; and
  o display the company name, the words ‘Australian Company Number’ (or ‘ACN’) or ‘Australian Business Number’ (or ‘ABN’) and the relevant number on:
  o the common seal (if the company has one);
  o every public document of the company;
  o every negotiable instrument (e.g. cheque, promissory note ) of the company; and
  o all documents lodged with ASIC.

Your company must keep:

• registers of members (shareholders);
• registers of option holders (if you have them);
• minutes of general meetings;
• minutes of meetings of directors;
• registers of charges created by the company over company property; and
• financial records that enable an assessment of the company’s financial position and performance and are sufficient for financial statements to be prepared (and audited if necessary) for at least seven years after the transactions are completed.

We have experience in drafting the following types of documentation which may reduce your liability as a director or office holder:

• Corporate Deeds;
• Directors Deeds; and
• Directors and Officers Indemnities.

We are also able to provide advice on directors and officers duties and liabilities and statutory compliance.

Call one of our Commercial Lawyers for free initial telephone advice on your circumstances on (02) 9525 8688.