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.

What Legal Duties Must Directors Follow?

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.

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

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.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey 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. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Ursula Hogben
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.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy