Directors and secretaries of a small company must follow the requirements set out in the Corporations Act 2001 (Cth) (Corporations Act).

ASIC is the company law watchdog. ASIC does not cover all compliance obligations or every situation affecting businesses. Therefore, seeking professional legal advice on compliance is recommended.

Even if an agent such as an accountant is appointed to look after the company’s affairs, it is the director or other officeholders – not the agent – who will be held responsible for legal obligations.

Directors must:

• be honest and careful in dealings at all times
• know what their company is doing
• take extra care if their company is handling other people’s money
• make sure the company can pay its debts on time
• see that the company keeps proper financial records
• act in the company’s best interests, even if this may not be in the director’s own interests, and even though the director may have set up the company for personal or tax reasons
• use any information obtained in the position properly and in the best interests of the company. Using that information to gain, directly or indirectly, an advantage for the director or for any other person, or to harm the company may be treated as a crime or may expose the director to other claims. This information need not be confidential; if used it dishonestly or in the wrong way, it may still be considered a crime.

If a director has personal interests that conflict with their duties as a director, they must disclose these at a directors’ meeting.

Individuals must not act as a director or secretary (or manage a company) without court consent if they:

• are an undischarged bankrupt
• are under the age of 18 years
• are subject to a personal insolvency agreement or an arrangement under Part X of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) that has not been fully complied with
• are subject to a composition under Part X of the Bankruptcy Act and final payment has not been made
• have been convicted of fraud or offences under company law, such as a breach of duties as a director or trading while insolvent.