Small business-your obligations as a company director
If you are a director or secretary of a small company, you must comply with your obligations under the Corporations Act. This is the case even if you appoint an agent to look after the company's affairs. As a director you have a variety of obligations under the Corporations Act. While this list does not cover every duty you may have or every possible circumstance, you are unlikely to be in breach of these obligations if you:
are honest and careful in dealing with the company and on its behalf with others
understand your legal obligations and make compliance with them part of your business
keep informed about your company's financial position and performance, ensuring your company can pay its debts on time and keeps proper financial records
give the interests of the company, its shareholders and its creditors top priority, which includes acting in the company's best interests (even if this may not be in your own interests) and using information you get through your position properly and in the best interests of the company, and
get professional advice or more information if you are in doubt.
As a director, you must be involved in the management of the company and in a position to guide and monitor the management of your company. You should only agree to become a company director or secretary if you are willing, able and have enough time to put in the effort.
You should avoid situations where someone offers to appoint you as a director or secretary on the promise that 'you won't have to do anything' and 'just sign here'. You could be exposing yourself to serious liabilities if you accept such a role.
Certain people are not allowed to act as a director or secretary without court consent, while others may be banned from doing so by ASIC. If you're not allowed to be a company director or secretary, you are also not allowed to manage a company. It is a serious offence to set up dummy directors while you really manage the company.
ASIC investigates corporate crime and, where necessary, we may take administrative, civil or criminal action against directors who fail in their duties.
More about this topic
More information on the ASIC website
Your company and the law - INFO 79