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Are you a director of a company, or thinking about becoming one?

In addition to the day to day requirements of a director’s position, there are a number of legally required duties to keep in mind as a director. Some duties require you to act in certain ways, while others are specific actions you need to take within specified timeframes.

In this article, we break down the most important directors’ duties to keep in mind while you fulfil your role as a director.

You can also download our 3 part checklist for your journey of directorship

Fundamental Directors’ Duties

Fundamental directors’ duties are set out under Division 1, Part 2D.1 of the Corporations Act 2001 (Cth) (CA). Directors are required:

  1. s 180(1) CA:  to act with care, skill and diligence, that a reasonable person would expect of a director, ensuring they:
    • s 180(2)(a) CA: act for a proper purpose;
    • s 180(2)(b) CA: do not have a material personal interest in making decisions;
    • s 180(2)(c) CA: inform themselves about the subject matter of the decision to the extent they reasonably believe to be appropriate; and
    • s 180(2)(d) CA: rationally believe that the decision is in the best interests of the company.
  2. s 181 CA: to act in good faith and in the best interests of the company and for a proper purpose.
  3. s 182 CA: to not use their position as director improperly to:
    • s 182(1)(a) CA: gain an advantage for themselves or someone else; or
    • s 182(1)(b) CA: cause detriment to the company.
  4. s 183 CA: to not use any information obtained because of their position as director improperly to:
    • s 183(1)(a) CA: gain an advantage for themselves or someone else; or
    • s 183(1)(b) CA: cause detriment to the company.
  5. s 184(1) CA: not to act:
    • s 184(1)(a)-(b) CA recklessly or dishonestly; or
    • s 184(1)(c)-(d) CA: not in good faith in the best interests of the company – or not for a proper purpose.

TL;DR: Fundamentally, as a director you are required to be a good person. Don’t act recklessly, dishonestly, improperly and always make sure you are acting in the best interests of the company.

Obligations to Stakeholders

Ultimately, directors’ duties are to the company and the company alone. However, beyond that, directors also have a number of important obligations to key stakeholders, particularly if you are a director that is involved in the day-to-day running of the business.

1. Employees

  • Providing a safe and healthy working environment, including ensuring that the workplace is free from hazards (e.g., Work Health and Safety Act 2011(Cth) and state based legislation).
  • Paying wages and superannuation, as well as providing other entitlements such as annual leave and sick leave (e.g., Fair Work Act 2009 (Cth) and Superannuation Guarantee (Administration) Act 1992 (Cth)).
  • Complying with all relevant employment legislation including workplace health and safety laws, anti-discrimination legislation workers compensation laws and taxation laws (e.g., Sex Discrimination Act 1984 (Cth), Racial Discrimination Act 1975 (Cth)).

2. Shareholders

  • Providing accurate financial statements to shareholders and regulators (where applicable).
  • Notifying shareholders of major decisions, such as mergers and acquisitions, changes in key personnel or substantial shareholdings.
  • Acting in accordance with the Company constituent documents (company constitution and shareholders agreement) or the replaceable rules (see s 141 CA).

3. Creditors

  • Preventing insolvent trading (s 588G CA).
  • Paying creditors.
  • Not entering into transactions to transactions which are ‘creditor-defeating’ (s 588FDB(1) CA):
    • selling company property for less than it is worth (acting reasonably, at fair market value); or
    • preventing, hindering or significantly delaying the property from becoming available to benefit creditors in a winding up.

4. Government

  • Notifying ASIC of changes to company details, including changes in:
    • registered office (s 142(2) CA);
    • principal place of business (s 146 CA);
    • office holders (s 205A – s 205B CA), or
    • shareholding (s 254X CA).
  • Keeping all company financial records up to date (P&L, receipts, invoices, etc).
  • Keeping company registers up to date, including registers of:
    • shareholders (s 168(1)(a)- 169 CA);
    • optionholders (s 168(1)(b) CA);
    • debenture holders (s 168(1)(c) CA); and
    • charges (s 271 CA).
  • Complying with reporting requirements.
  • Filing tax returns and paying all applicable taxes (including PAYG, GST and Super).
  • Holding any required licences, permits or qualifications, including a director ID.

Making sure the company is up-to-date with all tax and superannuation payments is an important one, as directors can become personally liable for tax debts incurred by the company even before the director was appointed.

In addition to legislated duties, directors may also be asked to provide personal guarantees on behalf of the company. Director’s guarantees are commonly seen for property leases, bank loans, and other large financial commitments. If you’ve been asked to sign a director’s guarantee and need a second opinion, contact us before committing to any personal obligations.


If you are a director of a company, or thinking about becoming a director of an existing company, make sure you keep abreast of your requirements. You need to make sure that you are aware of, and complying with directors’ duties. Multiple pieces of legislation come into play, one of the most important ones being the Corporations Act 2001 (Cth).

If you need assistance with understanding your duties, download our guide to director’s duties or get in touch.

Last updated: 24 August 2023

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