Business and Corporations Law: Director's Responsibilities Report

This report provides an analysis of corporations law, focusing on the duties and responsibilities of company directors. It examines the legal framework established by the Corporations Act of 2001, emphasizing the importance of directors acting in good faith and prioritizing the company's interests. The report highlights potential breaches of duty, such as using a position for personal gain or providing false information, as demonstrated in the case of Jenny Huston and Linc Energy. It also discusses the need for directors to stay informed about company finances and activities, as well as the implications of failing to do so. Furthermore, the report considers the importance of due diligence and the potential liabilities that directors may face if they are not fully informed. The conclusion stresses the significance of directors' duties in protecting the interests of the company, creditors, and shareholders, and it underscores the need for individuals to avoid being appointed as directors if they lack the capability and time to fulfill their obligations. The report references several sources, including ASIC and The Sydney Morning Herald.

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BUSINESS AND CORPORATIONS LAW
Student’s Name
Institutional Affiliation

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Opinion
Directors are the custodians of an organization’s governance as they manage corporations
on the shareholders’ behalf. The Corporations Act of 2001 vests certain responsibilities and
duties on directors. The director has a duty to ensure that their actions are undertaken in good
faith and that he/she should give priority to the company’s interests (Asic.gov.au, 2018). In
addition, a director has an obligation to ensure that their individual interests do not conflict with
that of the company. This means that Jenny Huston failed to observe her duties as the former
chairwoman of G8 Education. Huston had been charged with using her position as G8
Education’s director dishonestly. Evidently, she had used her position inappropriately for
personal gain at the company’s expense. Furthermore, she authorized the provision of false
information to a financial market operator. This resulted in the breach of Huston’s duty not to
use information improperly to gain advantage for herself to the company’s detriment
(Awlnsw.com.au, 2018). In the case of Linc Energy, the founder Peter Bond had the
responsibility to provide accurate information and communicate Dunk Island’s inability to be
reopened instead of insisting that it would resume operations when this was not the case. When
directors are dishonest and do not stay informed about the company’s finances then it can lead to
liquidation and shareholders losing their investment like is the case for Dunk Island.
Santos has taken the right move by conducting due diligence before it acquires Harbour
Energy, a private equity firm based in the US (Kruger, 2018). However, the new board will not
have adequate time to perform certain obligations before the acquisition. In order for a director to
ensure that they are up-to-date with a company’s activities they need to question the staff and
managers about the on-goings of the business (Asic.gov.au, 2018). The new directors will also
need to assess how the proposed action to acquire Harbour Energy will affect the performance of

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the business especially because it involves a significant amount of money. Moreover, the
directors may wish to seek professional help from outside to assist them in making an informed
decision. Therefore, it would not be prudent for Santos to close the deal with Harbour Energy so
soon yet the new board of directors has not been given enough time to get acquainted with what
is happening in the company. This could result in liabilities for the directors if the deal is not
successful yet they were not fully furnished with the relevant information.
Factual Comment
The Sydney Morning Herald is a newspaper that is published on a daily basis in Sydney.
Furthermore, it is one of the oldest and most influential newspapers in Australia (Encyclopedia
Britannica, 2018). In the period of the 1950s and the 1960s, the newspaper was internationally
recognized for showing its commitment towards responsible journalism and appealing to a
diverse audience.
Conclusion
Generally, the law on the corporation’s act and the duties of the director are meant to
protect the interests of the company, creditors, and the shareholders. For instance, directors are
required to make a disclosure that is frank and complete so that shareholders can make well-
informed decisions. This means that individuals should avoid being appointed as director if they
lack the capability, willingness and enough time to perform the obligations of a director in order
to avoid liabilities like the one that Huston had to bear.

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References
Asic.gov.au. (2018). Directors' key responsibilities | ASIC - Australian Securities and
Investments Commission. [online] Available at:
http://asic.gov.au/for-business/your-business/tools-and-resources-for-business-names-and-
companies/asic-guide-for-small-business-directors/directors-key-responsibilities/ [Accessed 17
May 2018].
Awlnsw.com.au. (2018). What are the Duties of Directors? [online] Available at:
http://www.awlnsw.com.au/assets/Latest%20news/Duties%20of%20Directors.pdf [Accessed 17
May 2018].
Encyclopedia Britannica. (2018). The Sydney Morning Herald | Australian newspaper. [online]
Available at: https://www.britannica.com/topic/The-Sydney-Morning-Herald [Accessed 17 May
2018].
Kruger, C. (2018). G8 Education's former chairwoman faces 25 years in jail. [online] The
Sydney Morning Herald. Available at: https://www.smh.com.au/business/companies/g8-
education-s-former-chairwoman-faces-25-years-in-jail-20180403-p4z7i9.html [Accessed 17 May
2018].