LAW202 Corporations Law

LAW202 Corporations Law

LAW202 Corporations Law


You are required to write a research essay addressing all of following points:

• Who are directors of company? What are their duties of directors under Australia Corporation Law?

• Give a short history of the evolution of director’s duties and responsibilities. Please enumerate their duties and responsibilities today. Are their duties the same in proprietary companies and public companies?

• Explain the consequences should directors contravene the law and the remedies available.

• What do you see in the future direction of director’s duties in Australia?

• Please cite relevant case law and the statutes in your answer and provide proper references.



A company’s director stands for the body undertaking the authority and the responsible body of a company. The company owner rely upon the director of a company. It is the company’s shareholders who are addressed as owners and company directors govern the management body of the organisation. It is the solely the management body which undertakes the affairs concerning business activities of a company in respect of the shareholder of a company. The company is the separate legal body, and the director is the sole caretaker of the company operating therein.LAW202 Corporations Law

This paper intends to discuss, what does director stands for and their authorities, responsibilities associated within the company under the Corporation Law of Australia. This paper will elaborate on the duties, responsibilities, activities need to carry out by a director on the basis of current day responsibilities and duties. The primary difference between the function of a director within the publicly owned company and a private company will be focused under this paper. The paper also depicts out the consequences that the directors face in case of any failure in exercising the responsibility and the remedies too that are available in the hands of directors. The paper focuses mainly on the future of directors duties and practices in Australia.LAW202 Corporations Law


The term director came into existence in section 9 of Corporations Act 2001, The director of the company is a body appointed as a director taking into consideration the qualitative factors looking upon the roles and responsibilities. The name director is assigned to such a position which functions in the business operations. An alternate director is a body exercising authority in the absence of primary director (Hill and Conaglen 2018). Whereas, if a body is not appointed as a director for the very purpose of this particular act and still it is serving its duties, and the other present Individual bodies are per the director, such a person fails to achieve the status of being director of a company. Such personal exercise authority by his/her personal expertise knowledge and cannot be fully relied upon (Hedges and Ramsay 2016). The role of the director can better be understood with the thorough analysis and study of the case of Shafron v Australian Securities and Investments Commission [2012] HCA 18.

The director of a company who is addressed with a pool of trust is levied with certain duties and responsibilities which falls under the corporation act. The various duties of the director in relation with the company fall under section 180, 181, 182, 183, 191 and 588G of a Corporations Act 2001. The corporation act, section 180 wants the director of the company to exercise duty as per the norms and regulations and in an effective manner. The extent of conscientiousness is similar to that of any other person. A test is held to measure the extent of conscientiousness which is termed as an objective test (Mendez, Pathan and Gracia 2015). Australian Securities and Investments Commission v Sino Australia Oil and Gas Limited [2016] FCA 42; 111 ACSR 220 also intends to express the same fact. The director should act in a manner that ensures the sole interest of the company.

According to the Companies Act 2001, section 181 ensure the affairs of the company are maintained in good terms. It is the director who must deal with the hard comings of the company to ensure the smooth functioning of the business. Every action must be following a suitable objective that should be in favour of a positive response (Barker 2016). The above mentioned facts are transparent in the case of the Australian Securities and Investment Commission v Adler [2002] NSWSC 171.

According to the section 182 of the Companies Act 2001, a director should not exercise his duty to deal with his personal goals. It also prohibits to carry out any activity that might cease to hamper the goodwill of the company. (Appuhami and Bhuyan 2015). In the case study of Australian Securities and Investments Commission v Vizard [2005] FCA 1037, It is seen that the directors are clearly banned from the utilisation of power as a means to achieve own goals.

According to the corporation’s act of section 183, a director making use of any such information available to him because of his designation and authority for his/her motive is also a state of the criminal offence. Corporations Act 2001, section 588G, does not permit a director or board of directors to involve into any trading related activity in case the company has collapsed or bankrupted (Varzaly 2015). There lies corporate ethics that are required to follow by the director. A director is a principal body, on his hands relies on the governing activities of a firm. The director leadership vision enables the other present employees to follow the path, and a director has to make sure that the subordinates are performing well. If the director fails to remain ethical then how come the subordinate is going to follow directors lead. The director needs to act very carefully and professionally. Achieving personal needs by utilising the designation of the director is a violation of rules and should be given much of importance (Hanrahan and Ramsay 2018). The director of a company is hired to look after the day to day activities being carried in the organisation. The nature of the director should be professional and should be of introvert personality. The director should have the eligibility and interest to deal with the employee problems, a director besides operating its activities should also be a part of socialisation. The director should socialise with its employees; this gives a chance to explore more and more about the employees and evaluate its performance. There exist a company’s article of associations, which lay down information about the director rights, duties and powers.

Hence, the duties and responsibilities of a director at this very present time serve to be very accurate. There are many dispute cases related to the activities of director and falls under the common law cases. The directors need to exercise duties and responsibilities cautiously. They should implement a formal judgement while using its functions.