Director’s Obligation – Tempora Legal

Director's Obligations

As a director of a company incorporated in Australia, it is very important that you understand your obligations as a director as breaching the law may have serious consequences for you and your company. We generally discuss some of these obligations below. If you need advice about your obligations, please send us an enquiry to see how we can assist you.

As a director of an Australian company, you have obligations under various laws to manage and oversee the affairs of the company. Most obligations are located in the Corporations Act 2001 (Cth), however, on some occasions you may have responsibilities under other laws such as Division 269 of Schedule 1 to the Taxation Administration Act 1953 (Cth), which deals with director penalty liability for unpaid taxes by the company.
For the most part, you can greatly reduce risk of non-compliance with the various financial provisions by ensuring that your company has systems and processes in place to keep on top of the company’s financial position. Although you can hire people to assist you in keeping your company compliant with its financial and reporting obligations, you still need to ensure that you understand and make enquiries to feel confident that the company’s representatives have done their jobs correctly. The buck ultimately stops with you.
In doing so, you should have a fundamental understanding of how to manage the company assets, debts, employees and investments. For example, it is important to differentiate what assets and debts belong to the company and to you. This may vary depending on the capacity in-which the company is acting, for instance, if it is acting in a corporate trustee capacity.
Your actions as a director may also impact future actions that a company administrator or liquidator could take against you. As an example, they may bring a claim for a breach of fiduciary duty or recovery action against you for an unreasonable director-related transaction.
This is a complex, technical and broad area of the law. We have established relationships with corporate tax accountants and insolvency practitioners in Perth, Western Australia that we can use to advise you and your company.
If you would like to know more about how we can assist you in understanding your obligations or setting up processes and systems to minimize your risk or breaching the various financial provisions, send us an enquiry. Alternatively, continue researching on our website for an answer to your enquiry. The next page discusses company administration.

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