Company Compliance
14. Director Non-Compliance
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 06 Jul 2015
- If you breach your company directors' duties there are a number of things that may happen to you depending on the severity of the offence.
- You could be taken to civil court and:
- issued with a fine of up to $200,000 for a civil offence;
- disqualified from management; or
- be required to pay compensation.
- You can also be found criminally liable for failing to exercise your duties as a director.
- A court may find that you are criminally liable for failing to exercise your powers and discharge your duties in good faith and in the best interests of the company or for a proper purpose. In this case you may:
- be fined up to $200,000; and
- imprisoned for up to 5 years.
- Directors may wish to seek out insurance to cover them in the event that a liability arises out of their breach of a duty.
- You should check your Director and Officer’s insurance policy (D&O policy) as to whether or not you are insured for certain actions or for failing to do something (omissions).
- According to law a company cannot indemnify you if you are found guilty of failing your directors' duties or for certain offences under the Corporations Act 2001 (Cth). There are certain exceptions so it is best to speak with your compliance lawyer or adviser as well as checking your D&O policy. You should also ensure your company is not providing these types of indemnities to directors and officers.
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