What Are My Responsibilities as a Director of a Public Company?

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Table of Contents

• Public vs Private Companies
• General Company Director Responsibilities
• Duties Particular to Directors of Public Companies 
• Key Takeaways
• Frequently Asked Questions

If you are operating a successful business, you may wish to transform your company from a private company into a public company. As with any business decision, it is important you understand the impact of the change in structure, particularly if you are the business founder or director. This article will consider your responsibilities as a director of a public company and how it differs from private companies. 

Public vs Private Companies

A private company is a company that does not offer shares to the public. These companies may be owned and operated by individuals, or they may have external private investors and shareholders. Contrastingly, a public company can issue and sell shares to the general public to raise additional funding. 

Generally, public companies are more regulated, have different reporting obligations and can be more onerous to manage as a result. For example, before publicly listing on the stock exchange, the company must prepare a  full prospectus, also known as the company’s initial public offering (IPO). Prospectus documents need to disclose the relevant information to allow potential investors to make an informed decision about the performance, assets and liabilities of the company before purchasing shares in the company.

General Company Director Responsibilities

In addition to their operational responsibilities, all company directors also have legal responsibilities. These are derived from common law and the Corporations Act. These core duties include:

It is important to note that these duties will also apply to shadow directors. This means that even if you are not formally appointed as a director and registered with ASIC, if you are acting as a director and instructing the registered directors, you will likely need to fulfil your director’s duties.

Duties Particular to Directors of Public Companies 

The above director’s duties predominantly apply to both public and private companies. However, the way a director fulfils their duties may change depending on whether the company is public or private. 

For example, all company directors must act in the best interest of the company and avoid conflicts of interest. For a public company, this means:

• disclosing all conflicts of interest to the board;
• abstaining from any board vote related to the conflict;
• not participating in the meeting. 

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.

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Key Takeaways

When setting up or operating a business, it is important to understand what your director’s duties are and how they can change depending on whether your company is publicly listed or privately owned. Operating a public company typically has additional disclosure obligations for directors and prospective shareholders. This structure can be more difficult to manage. Failure to uphold and comply with the director’s duties can lead to criminal or civil penalties depending on the severity of the breach. These duties can also apply to unofficial shadow directors.

If you are unsure whether your company can trade, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions