Skip to content

What’s Yours is Mine: Directors’ Duties and Company Accounts

The Perth District Court recently convicted West Australian director, Oliver Wood, for breaching his directors’ duties. Following an eight-day trial, the Court convicted Wood on three counts of dishonestly using his position as a director including withdrawing more than $29,000 from SEO Company Pty Ltd’s bank account for his personal use.

What Went Wrong?

In withdrawing money from the company for his personal use, Mr Wood breached his director’s duty not to make improper use of his position. Wood could have caused detriment to the company to gain an advantage for himself.

Directors have legal duties to a company. Australia’s Corporations Act 2001 (the Act) governs Directors’ duties, company governing documents including the Constitution as well as any shareholders’ agreements.

Directors need to understand their duties and how they apply. Under the Act, directors must abide by a number of obligations, including:

  • Act in good faith,
  • Avoid conflicts of interests,
  • Not make improper use of information or their position, and
  • Ensure the company keeps accurate financial records.

It is critical that company founders and management understand that any payments made by a company need to be for a proper purpose. Individuals can be paid a salary, shareholders can be paid dividends and in certain circumstances, a company can make a loan to an individual. All company transactions, however, should be scrutinised to ensure they were for a proper purpose and that the amounts were not in bad faith.

Front page of publication
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
Continue reading this article below the form
Loading form

How can Directors Protect Themselves?

Directors should understand their duties under the Corporations Act and company documents including the Constitution and any shareholders agreement before they agree to become a director.

It is important for directors to seek independent legal advice, and not from their company’s legal advisor who acts for the company. While the company’s legal advisor can give general guidance on directors’ duties, the company’s legal advisor acts for the company and not for any individual director.

Conclusion

LegalVision’s corporate and commercial lawyers have considerable experience with advising both companies and individual directors. If you have any questions about your directors’ duties, please get in touch on 1300 544 755.

Register for our free webinars

ACCC Merger Reforms: Key Takeaways for Executives and Legal Counsel

Online
Understand how the ACCC’s merger reforms impact your legal strategy. Register for our free webinar.
Register Now

Ask an Employment Lawyer: Contracts, Performance and Navigating Dismissals

Online
Ask an employment lawyer your contract, performance and dismissal questions in our free webinar. Register today.
Register Now

Stop Chasing Unpaid Invoices: Payment Terms That Actually Work

Online
Stop chasing late payments with stronger terms and protections. Register for our free webinar.
Register Now

Managing Psychosocial Risks: Employer and Legal Counsel Responsibilities

Online
Protect your business by managing workplace psychosocial risks. Register for our free webinar.
Register Now
See more webinars >
Ursula Crowley

Ursula Crowley

Read all articles by Ursula

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards