Under the Corporations Act, there are four general duties of a director:

1: to act with the degree of care and diligence that a reasonable person would expect to show in the role, they need to understand what the company is doing at all times.

2: to act in good faith in the best interests of the company and for a proper purpose.

3: not to improperly use their position to gain advantage for themselves or someone else, or to the detriment of the company;

4: not to improperly use information they gain while being a director to gain advantage for themselves or someone else, or to the detriment of the company.

However, this is not all. The Corporations Act also sets out a number of specific duties, including a duty to ensure that a company:

i) does not trade whilst insolvent or where they suspect that it might be insolvent;

ii) complies with its obligations to the keeping of financial records. See below for further information on records that are to be kept; and

iii) complies with lodging information with ASIC. This is important in the day-to-day running of your company, and we will go into further detail below.

Other specific duties exist; however, they are relevant only for large proprietary and publicly listed companies, so we will not go into the details here. Failure in your duties as a director can mean fines, at the very least, through to personal liability for insolvent trading and criminal sanctions, so it is essential you’re ready and prepared to take on your new role as director.