HOW FAMILIAR ARE YOU WITH YOUR DUTIES AND OBLIGATIONS AS THE COMPANY’S OFFICIAL REP?
According to the Corporations Act, a director is vested with set of duties and responsibilities including:
- Making decisions in good faith and the best interests of the company; and
- Keeping detailed records of company accounts; and
- Ensuring that the company ceases to operate when it faces liquidation.
As a director, you should be well informed of all affairs of the company. For example, if the company ledger is poorly managed, you cannot excuse yourself from that responsibility by claiming that you are not the company accountant. In this instance, you should have sought advice from an accountant to manage the company ledger.
If a company has two or more directors, all are equally responsible for the operation of the business and should be keeping each other accountable. If there is a misconduct by the other director(s) and you turn a blind eye on the matter, you would be held legally responsible for neglecting to safeguard the interest of the company. However, if you are reasonably unaware of another director’s misconduct, you may be discharged of any legal responsibility.
As such, you are primarily responsible for all facets of the business as a company director and there are serious consequences for failure to comply with your obligations.
CMI Legal is a dedicated consultant to many top companies in Australia. We leverage our professional insights and years’ experience to help you navigate the legal issues surrounding business operations and ensure that you meet your requirements as a company director.