Reading time: 3 minutes

A shareholders agreement is a legal contract between the various shareholders of a company. The shareholders agreement sets out the rules for the operation of the company, and regulates the directors of the company. As the directors may not necessarily be shareholders, they may not have a direct investment in the company. As a result, it is extremely important that the shareholders agreement clearly defines the duties of each director so that the interests of all stakeholders are protected. A business lawyer is the best person to speak with to draft your Shareholders’ Agreement.

Directors are in a position of power and make many decisions regarding the day-to-day operation of the company. It is important that directors are well aware of their duties, so we have set out some of the more standard duties below:

  • Representing the interests of the shareholders

A director of a company is usually nominated by a shareholder and appointed by the shareholders agreeing on his or her appointment as director. A director may represent the interests of the particular shareholder who nominated him or her and, in doing so, will not be breaching his or her duties as a director. However, a director is also required to act in the best interests of the company, and for a proper purpose.

  • Acting with due care and diligence

Under the Corporations Act, a director is required to discharge all of his or her duties with the degree of care and diligence that a reasonable person would exercise if they were a director of the company in the same circumstances.

  • Not using their position to gain advantage

As a director of a company, a director has access to the company’s confidential information. A director of the company must not, use his or her position to gain an advantage for himself or herself, or for anyone else.

  • Disclosing conflicts of interest

If a director has a personal interest in a matter, which relates to the affairs of the company, the director is required to disclose this interest. The director is under a duty to provide notice of this conflict to the board, and the board may, if necessary, exclude the director from involvement in a matter in which the director has a conflict of interest.

Directors' Duties Complete Guide

If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.

Download Now


Duties of directors, as mentioned above, are generally prescribed under the Corporations Act. However, it is best to have them outlined in a Shareholders’ Agreement, as not all directors are aware of their duties under the Corporations Act. Having it clearly set out in the shareholders agreement ensures that directors are aware of their duties and understand the level of care that is expected from them as directors of your company. For more information relating to the duties of directors in a company, contact LegalVision on 1300 544 755 to speak with an experienced business lawyer.


Australia’s Global Talent Visa: How to Attract Top Talent

Thursday 7 October | 11:00 - 11:45am

Understand how to navigate Australia’s complex migration system to attract top overseas talent with our free webinar.
Register Now

5 Essential Contracts for your Online Business

Thursday 14 October | 11:00 - 11:45am

Learn which key contracts will best protect your online business with our free webinar.
Register Now

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer