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White Collar Crime » Breach of Director’s Duties

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Breach of Director’s Duties

A company director has a number of duties under the Corporation Act 2001 (Cth). The Director has general civil obligations to exercise their powers with care, diligence and in good faith and to not use their position or access to information improperly. Failure to do so, can also result in a criminal offence. There are further additional duties imposed on a Director that may result in a fine or term of imprisonment if not complied with (see the table below for a list of offences for breach of Director duties).

Matters of this nature are investigated by the Australian Securities & Investments Commission (ASIC) and if they satisfied that there is sufficient evidence for prosecution, it is referred to the Commonwealth Director of Public Prosecutions.

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General Duties in the Corporations Act 2001 (Cth)

Maximum Penalty

(see Schedule 3 of the Corporations Act)

A director commits an offence if they are reckless or dishonest and fail to exercise their powers and discharges their duties in good faith in the best interests of the corporations or for a proper purpose.

  • Section 184(1)

15 years imprisonment

A director commits an offence if they use their position dishonestly with the intention of, or is reckless to, gaining an advantage for themselves or someone else or causing detriment to the corporation

  • Section 184(2)

15 years imprisonment

A person who obtains information because they are or have been a director, commits an offence if they use the information dishonestly with the intention of, or is reckless to, gaining an advantage for themselves or someone else or causing detriment to the corporation

  • Section 184(3)

15 years imprisonment

Other Duties in the Corporatiosn Act 2001 (Cth)

Maximum Penalty

(see Schedule 3 of the Corporations Act)

A director must disclose any material personal interest in a matter that relates to the affairs of the company unless certain exceptions apply (see section 191 (2) of the Corporations Act)

  • Section 191(1)

$6,300

A director of a public company who has a material personal interest in a matter that is being considered at a director’s meeting must not be present while the matter is being considered or vote on the matter

  • Section 195(1)

$4,200

A person who has held a managerial or executive office in a company or their relative, spouse or associate must not give a benefit if it contravenes sections 200B or 200C of the Corporations Act.

  • Section 200D(1)

$37,800

A director must give any information affecting or relating to the director that the company needs

  • Section 205F)

$6,300

A director must notify the relevant market operator of any notifiable interests

  • Section 205G(9)

2 years imprisonment

Directors should take reasonable steps to ensure that a company complies with its obligations in the Corporations Act 2001 in relation to the keeping of financial records and financial reporting

  • Section 344(2)

15 years imprisonment

Directors have a duty to ensure that a company does not trade while insolvent or where they suspect that the company is insolvent

  • Section 588(G)

5 years imprisonment and/or $420,000

If you have been charged with a breach of any of these offences, Streeton Lawyers can help you understand your obligations and discuss your options.