Directors' Duties in Australia: A Case Study Analysis

Running Head: Case Study
CASE STUDY
Name of the Student
Name of the University
Author’s Note

CASE STUDY1
Issue:
The issue in the case whether the Directors are liable or entitled to the remedies.
Rules:
Directors duties are a combination of statutory, common law and the equitable duties
owed the primary directors of the Board and such duties are applicable towards the body
corporate which employs them in its Board. Director’s duties is somewhat similar to that of the
relationship between the trustee and the beneficiary (Ford 1974) and the agent and the principal.
Thus, the Directors form the core of the Company and the it is the actions of the Directors which
is accorded as the actions of the company.
In Australia, the duties of the directors can be analyzed in three subcategories:
 General or the Fiduciary Duties of the Directors: following are the designated fiduciary
duties of a Director in Australia:
o Maintain the actions in accordance with the good faith which is not conflicting with
the interests of the company. Such good faith can only be maintained if the Directors
are bestowed upon the duty of care towards the affairs of the company and their
decisions should not breach their duty of care and amount to losses to the company
(Donoghue vs. Stevenson [1932] AC 562.).
o It is the duty of the director to maintain the usage of his or her powers only in the
proper purpose (Harlowe’s Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co
NL (1968) 121 CLR 483, 493). Any use of power for the improper purpose should be
avoided.

CASE STUDY2
o Any personal interest should not be conflicted with the interest of the company. In
other words, any interest of the company should not be jeopardized for the personal
gains (ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] HCA
963, High Court (Australia)).
o It is the duty of the directors to retain their discretion over the affairs of the company
and its management.
 Statutory Duties: there are certain duties which has been explicitly laid down in the
Corporations Act 2001:
o According to section 181 of the Act, it has been explained that it is the primary and the
general duty of the directors to maintain the duty to act in good faith towards the interests
of the company. In addition, such good faith shall be exercised in the best interest of the
company along with the duty to act in accordance with the proper purpose of the
company. These duties are the general duties and have been given a legal enforcement by
incorporating them in the Corporations Act (Australian Securities and Investments
Commission v Vines (2003) 182 FLR 405).
o Section 182 of the Act explains the duty of the directors to not use their position to gain
undue advantage over other members or the interests of the company.
o Section 183 of the Act explains that it is the duty of the directors to maintain secrecy with
respect to the information of the company at all times and not to use them for personal
advantages (Bainbridge and Connor 2016).
o Section 184 of the Act explains that if the duty of the director is breached at any time as
per the application of sections 181, 182, and 183, then according to section 184, such