Director's Duties and Liabilities under Corporation Act

RUNNING HEAD: CORPORATION ACT
Corporation Act
Name of the student
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Author Note

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CORPORATION ACT
Issue:
The primary concern regarding the provided case is whether the organisational directors
are entitled or liable to the undesirable situation.
The secondary concern regarding the provided case is that whether Austen will be held
liable for his action.
The third issue regarding the provided case is that whether the directors will be held
liable for breaching their duty.
The last issue regarding the given case is that whether there is any defense for the
directors against breaching.
The rule of law:
Duties of the directors are combined of equitable duties, public law and statutory owing
the Board directors those who are primary and the duties are applied over the corporate body that
helps in the employment of the directors. Duties of the directors look same to that of the relation
in between the beneficiary and the trustee and also along with the principal and agent. Therefore
the Directors helps in the formation of an organisation and the Directors help in running of the
organisation according to their actions.
According to Australian law, the director's duties are divided into three categories:
Fiduciary Duties or the General of the Board of Directors:
 The Board Directors maintains the action with some noble faith that should not be
conflicting along with organisation’s interest. Such noble faith can be continued if the

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CORPORATION ACT
Board Directors are conferred for the duty of caring towards the company’s affair and
the decision of the directors should not be breaching their duty that will bring about a loss
in the company.
 Director’s duty helps to support the power usage of the directors in the good and noble
purpose that should be considered as the proper. The power should not be misused, and it
should be avoided if there is a misuse of power.
 There should not be any conflict related to the personal interest that will hamper the
interest of the business. In the present situation, any personal interest should not reflect in
hampering the interest of an organisation. There must not be any personal gain that will
affect the top interest of the company. This statement can be supported by the case study
of ASIC vs Citigroup Global Markets Australia Pty Ltd.
 Director’s duties are to retain the discretion relating to the business of the management of
the organisation and the company.
Statutory Duties:
 According to the provisions of the Corporation Act, u/s 181 states that the director’s
general and primary duty is for maintaining the good faith for the top interest of the
organisation. Along with good faith, there should be a presence of proper purpose that
should be exercisable for the noble interest of the organisation. The mentioned duties can
be considered as the general responsibilities that are legally enforced by inserting them
the CA 2001. This fact can be supported by the case study of ASIC vs Vines 2003.
 U/S 182 of the said Act, the director’s duties should not attempt any extra advantage
over the best interest of the organisation.

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CORPORATION ACT
 U/S 184 of the said Act, the director’s duties if breached in any point of time applying s
181, 182, 183. According to the explanation of the s 184 if the director’s breach any duty,
then it will be considered as the intentional breach and it will lead the director to the
criminal liability.
 The provisions of the Corporation Act 2001 u/s 180(1) states that the director's duty is to
act accordingly with diligence and care for the governance and affair of the corporation.
This can be supported by the case study of Daniels vs Anderson 1995.
There occurs a difference if the breaching of duty takes place under the corporation and
general law. Primarily if the director of the company is considered to be performing
dishonestly under the provisions of the CA, in this situation, director is held to be liable
according to the criminal fine, but this type of penalties are not mentioned in the provisions
of the general rule. Secondarily if the general duty is breached in that case the remedy comes
in form of rescission or equitable damages. In the situation of the breach of statutory
responsibilities, the authority that will be enforced will be ASIC, in that case, the remedies
will be according to the statute.
A company functions because of the actions of the directors; they are considered to be
souls of the company. According to the organization’s nature and the soul of the director they
should carry out their performance with diligence and utmost care as a good individual and
holds the liability for compensating and exercising the powers of the organization for the
suffered loss due to director’s negligence to omit or use the care and power of the director.
Therefore inserting the director’s duties towards the organisation and the enforcement
recognition becomes an important factor due to which there is a development of the
corporation law in the extent of Australia.