Chapter 13 Directors Duties: Remedies and Consequences www.learnnowbiz.com Corporate Governance

Consequences of Breaches www.learnnowbiz.com Corporate Governance

Consequences of Breach www.learnnowbiz.com Corporate Governance

Consequences of Breach Civil penalty provisions are imposed by the court upon application by ASIC or by the company damaged. ASIC can then make a pecuniary penalty order, a disqualification order or a compensation order. IF ASIC believes the contravention is serious enough for a criminal penalty it can bring criminal proceeding under S184. Criminal proceedings may be started regardless of whether and what penalty has been imposed under the civil penalty provisions. www.learnnowbiz.com Corporate Governance

Consequences of Breach Criminal Penalty Provisions: www.learnnowbiz.com Corporate Governance

Removal of a Director A practical option for shareholders where no breach of duty is proved may also be to remove the director. In the case of a proprietary company under S203C members may vote a director off the board if allowed in the constitution. For public companies the power in general meetings is always available through the procedure contained in S2503D. www.learnnowbiz.com Corporate Governance

Statutory Derivative Actions S236 enables actions to be taken in the name of the company. It is available to: A member, former member or person entitled to register a member. An officer or former officer. S241 Orders available to the court: Order company or directors or officers to do certain things. Order independent persons to investigate and report to the court. Investigate the books of the company and order costs. www.learnnowbiz.com Corporate Governance

Relief Directors can be relieved from the consequences of a breach of duty by: Members in a general meeting accepting the directors’ full disclosure of the breach or anticipated breach. The provisions of a company’s constitution. The court may relieve a person from liability. www.learnnowbiz.com Corporate Governance

Statutory Business Judgement Rule S180(2) provides protection in respect of the S180 statutory duty of care and diligence for director or officer who carries out duties by making a business judgement if they: Made the judgement in good faith for proper purpose. Had no material interest in the subject matter of the judgement. Informed themselves about the subject matter of the judgement to the extent they believe is reasonably appropriate. Rationally believed the judgement was in the best interests of the company. www.learnnowbiz.com Corporate Governance