FACT SHEET: DIRECTORS’ OBLIGATIONS
Within Australia’s corporate regulatory regime, directors of Australian companies owe duties to
their company. Some of the key duties are to:
act in good faith and in the best interests of the company;
act honestly and not to act for an improper purpose;
avoid situations where there is a conflict of interest between the company and the director.
Where such conflicts arise, directors may be able to rely on qualifications to this duty
which may be set out in the relevant company's constitution. These qualifications may
require disclosure of the interest by the director and the non-participation by that
director in any decision or approval by the board of directors which relates to that
exercise due care and diligence;
avoid improper use of the director's position;
avoid improper use of information; and
prevent insolvent trading by the company.
Directors also have obligations with respect to the preparation of the company's financial statements
including the making of a declaration as to whether the financial statements comply with accounting
standards and give a true and fair view of the financial position and performance of the company.
Breaches of certain directors’ duties carry serious penalties including fines, imprisonment and being
prohibited from acting as a director or managing a company.