Recent case law has increased the focus on the roles and duties of the board of directors. There are a range of legal duties that a director has. The duties are chiefly prescribed by the Corporations Act 2001 (Cth) (“Act”). Duties include those of exercising powers with care and diligence, in good faith in the best interests of the company and for a proper purpose. Also discussed are the duties of directors to not use their position or information gained in their position improperly, and the duty to prevent the company trading whilst insolvent.

See Director’s statutory duties.

In addition to statutory duties there exist a number of common law and equitable duties. Many of these duties mirror those found under the Act.

See Director’s common law duties.

A company may be governed by a constitution, the replaceable rules or a combination of both. These sources of governance may impose additional requirements that apply to directors and company secretaries that must be complied with. The constitution will also usually set out the powers of the directors. The definition of "officers" under the Act does not only include directors. The width of the definition is an important consideration in the context of duties as the statutory duties apply to "officers".

See Company’s constitution and officers under s 9.

Directors face a range of possible penalties for breaches of their duties under statute and common law.

See Consequences of breaches.

A director owes their statutory and common law duties to the company directly and not to the individual shareholders. Consequently, when a director breaches their duties the company can take action against the director. However, a company may not always be willing or able to take action against an individual director or a board of directors. The Corporations Act 2001 (Cth) provides mechanisms for an individual shareholder and/or ASIC to take actions against directors for breaches of their duties.

See Actions for breaches of directors' duties.