Obligations of company officeholders

About officeholders

Officeholders are responsible for the company and make important decisions about it. They are also responsible for making sure that their company meets all its obligations. A company director’s main responsibility is to act in the best interests of the company and its shareholders, while ensuring the company operates legally and ethically.

There are rules about who cannot be an officeholder.

The responsibilities listed below are set out in the Corporations Act 2001. You may have obligations under other laws or your company’s constitution.

Responsibilities of officeholders

Under the Corporations Act, officeholders have all the duties of company officers. Directors and secretaries also have other specific duties.

Act in the interests of your company

Officeholders are legally required to act in the best interests of their company.

This means you should always:

• be honest and careful in everything you do 
• understand and follow all the laws that apply to your company, not just the Corporations Act
• make sure your company can pay its debts on time
• understand your company’s operations, financial position and business dealings
• make decisions in the best interests of your company
• make sure your company keeps proper records
• know if the company is in financial difficulty, and act.

You should get professional advice when you need it.

Part of acting in the best interests of your company is making decisions in its best interests too.

When making decisions that affect the company, you must:

• make the decision in good faith and for a proper purpose
• not have a material personal interest in the decision
• put the company’s interests first, even if this conflicts with your own interests
• disclose any material personal interests you have
• not harm the company or get an advantage for yourself or someone else.

Company director responsibilities

The directors of a company are responsible for managing its business.

Their responsibilities can depend on:

• the size and structure of the company
• the company constitution.

Most directors of small proprietary companies have hands-on responsibilities.

Directors can face legal and financial consequences. For example, a company director can be liable for certain debts of the company.

Company directors have a legal obligation to prevent insolvent trading. There can be serious consequences if you allow your company to incur debt when it is insolvent.

Understand your company

As a director, you should understand what your company is doing at all times.

To achieve this, you should:

• track your company’s activities and performance
• speak with managers and staff about the business
• take an active part in directors’ meetings
• understand how to manage your company’s assets, debts, employees and investments
• find out how any decision will affect performance and reputation
• stay informed about your company’s financial position.

Company secretary responsibilities

The role of company secretary can depend on the type of company. As officeholders, they have many of the same obligations as directors.

Proprietary companies do not need to have a secretary. Public companies must have at least one secretary who normally lives in Australia. In public companies, a secretary’s role is usually broader, and focused on governance. They may be given extra responsibilities through the company’s constitution.

The same person can be both a director and a secretary. If there is no secretary, the directors take on the secretary’s responsibilities.

Key responsibilities

In the Corporations Act, the company secretary’s responsibilities include making sure the company tells ASIC about changes to:

• the company officeholders
• the register of members
• any ultimate holding company.

They are also responsible for responding to an extract or return of particulars. An ‘extract of particulars’ is a statement setting out the details of a company as they are recorded on the companies register.

If a proprietary company does not have a secretary, the directors have these responsibilities instead.

Obligations related to ASIC

Officeholders are responsible for some of a company’s ASIC-related obligations. These include:

• paying relevant ASIC fees (all officeholders)
• checking and respond to ASIC’s annual company review statement (directors and secretaries)
• telling ASIC about changes to your company (directors and secretaries)
• passing an annual solvency resolution (directors)
• deregistering a company when it closes (directors).

Officeholders of some companies will need to lodge financial reports.

Obligations to external administrators

Company officeholders have specific duties to external administrators. For example, if asked to, they must provide records, statements and help in a timely way. Learn more about what to do when closing your company.

Obligations under whistleblower laws

Company officeholders have obligations under laws about whistleblowers. You must ensure you do not breach the whistleblower provisions when handling a whistleblower disclosure. Your main legal obligations are to not:

• disclose a whistleblower's identity or information likely to lead to their identification, unless that disclosure is authorised under the law
• cause or threaten to cause detriment to (or victimise) a whistleblower for making their disclosure.

Information sheet 247 Company officer’s obligations under whistleblower laws (INFO 247)

Penalties

There are penalties for officeholders who do not meet their legal duties. You may be penalised even if you did not mean to do the wrong thing.

These penalties include criminal charges that may result in fines and jail time. You may not be able to take on certain roles in businesses and companies in the future.

If you did not consent to be an officeholder

The company must obtain, and keep written and signed consent from you before you are appointed as a company director or secretary. If you’ve been listed as an officeholder without your consent, you can ask us to review your status as an officeholder.

If you did not consent to be a company officeholder