T7(a) Directors and Officer Duties – Section 180
BTF2000 – Exam notes
Australian Corporations Law
Topics/concepts assessed:
6. Corporate Governance and Company Management
7. Directors’ Duties
7a (i) Duties and Obligations of Directors and Officers (s180)
7a (ii) Directors’ Duty of Care and Diligence
7b) Duty to prevent Insolvent Trading (s588G)
7c) Fiduciary Duties
8. Members’ Remedies
9. The End of a Company:
9a) Receivership & Voluntary Administration; and
9b) Liquidation
KEY:
______ = Corporations Act Sections
______ = Common law cases
______ = Key topics
______ = Key points
,T7(a) Directors and Officer Duties – Section 180
T7 – DIRECTORS’ AND OFFICERS’ DUTIES
Topic 7
Directors’ and Officers’ Duties
Topics/concepts covered:
PART 7A) Section 180
1. Duties and obligations of directors and officers
2. Directors’ duty of care and diligence
i) Standard of care
ii) Requirements of diligence
iii) Defences against breach of care and diligence
PART 7B) Section 588G
1. Duty to avoid insolvent trading
2. Safe Harbour Provision under s588GA
3. Defences against insolvent trading under 588H
4. Penalties, sanctions remedies for breach
, T7(a) Directors and Officer Duties – Section 180
T7(a) – Section 180
Topic 7
Part A – Section 180
1. Duties and obligations of directors and officers
2. Directors’ duty of care
1. DUTIES AND OBLIGATIONS OF DIRECTORS AND OFFICERS
1. D’s + O’s of all officers –
Duties (common law)
Directors
Duties (statutue)
Company secretary
OFFICERS
Senior members
external administrators
(when facing insolvency)
DUTIES OF OFFICERS
Def: S9 of Corps Act:
The term Officer is defined in Section 9 of the Corporations Act 2001 (Cth) and includes directors,
company secretaries, agents and employees of the company.
Duties Common law duties:
• Be a fiduciary:
• avoid conflicts of interest such as not making personal profits or acting in their own interests
• act in good faith in the best interests of the company
• use their powers for a proper purpose
• act with reasonable care and diligence
Statutory law duties:
• act with reasonable care and diligence (s180)
• prevent insolvent trading (s588G)
• act in good faith in the best interests of the company and for a proper purpose (s181(1)(a)&(b))
• not misuse their position (s182)
• not misuse information (s183)
• disclose certain interests (s191)
If in ASIC ASIC will take action against an officer in breach of their Corporations Act duties
breach
of Remedies that ASIC can seek for breach:
duties: • a fine (either criminal or civil)
• disqualification (civil)
• imprisonment (criminal)
Company Members or other officers can use common law to take legal action in response to a breach.
Company can take legal action against officer if they breach contract.
Remedies that company can seek for breach:
• compensation
• damages
BTF2000 – Exam notes
Australian Corporations Law
Topics/concepts assessed:
6. Corporate Governance and Company Management
7. Directors’ Duties
7a (i) Duties and Obligations of Directors and Officers (s180)
7a (ii) Directors’ Duty of Care and Diligence
7b) Duty to prevent Insolvent Trading (s588G)
7c) Fiduciary Duties
8. Members’ Remedies
9. The End of a Company:
9a) Receivership & Voluntary Administration; and
9b) Liquidation
KEY:
______ = Corporations Act Sections
______ = Common law cases
______ = Key topics
______ = Key points
,T7(a) Directors and Officer Duties – Section 180
T7 – DIRECTORS’ AND OFFICERS’ DUTIES
Topic 7
Directors’ and Officers’ Duties
Topics/concepts covered:
PART 7A) Section 180
1. Duties and obligations of directors and officers
2. Directors’ duty of care and diligence
i) Standard of care
ii) Requirements of diligence
iii) Defences against breach of care and diligence
PART 7B) Section 588G
1. Duty to avoid insolvent trading
2. Safe Harbour Provision under s588GA
3. Defences against insolvent trading under 588H
4. Penalties, sanctions remedies for breach
, T7(a) Directors and Officer Duties – Section 180
T7(a) – Section 180
Topic 7
Part A – Section 180
1. Duties and obligations of directors and officers
2. Directors’ duty of care
1. DUTIES AND OBLIGATIONS OF DIRECTORS AND OFFICERS
1. D’s + O’s of all officers –
Duties (common law)
Directors
Duties (statutue)
Company secretary
OFFICERS
Senior members
external administrators
(when facing insolvency)
DUTIES OF OFFICERS
Def: S9 of Corps Act:
The term Officer is defined in Section 9 of the Corporations Act 2001 (Cth) and includes directors,
company secretaries, agents and employees of the company.
Duties Common law duties:
• Be a fiduciary:
• avoid conflicts of interest such as not making personal profits or acting in their own interests
• act in good faith in the best interests of the company
• use their powers for a proper purpose
• act with reasonable care and diligence
Statutory law duties:
• act with reasonable care and diligence (s180)
• prevent insolvent trading (s588G)
• act in good faith in the best interests of the company and for a proper purpose (s181(1)(a)&(b))
• not misuse their position (s182)
• not misuse information (s183)
• disclose certain interests (s191)
If in ASIC ASIC will take action against an officer in breach of their Corporations Act duties
breach
of Remedies that ASIC can seek for breach:
duties: • a fine (either criminal or civil)
• disqualification (civil)
• imprisonment (criminal)
Company Members or other officers can use common law to take legal action in response to a breach.
Company can take legal action against officer if they breach contract.
Remedies that company can seek for breach:
• compensation
• damages
