Business & Corporate Lawyers › Director Duties & ASIC
Director Duties Lawyers — Personal Liability. ASIC Investigations. Early Advice Is Essential.
Company directors carry significant personal legal obligations under the Corporations Act 2001. Breaches of director duties — including insolvent trading, failure to act in good faith, and misuse of company information — can result in civil liability, civil penalties, disqualification from managing corporations, and in serious cases criminal prosecution. When ASIC investigates, directors need specialist legal representation from the outset.
⚠ If ASIC has contacted you, served a notice, or commenced an examination — get legal advice immediately. Compulsory examinations under s19 of the ASIC Act require you to answer questions under oath. You have the right to legal representation. Act now.
What We Help With
Director duties and corporate compliance — all situations.
Insolvent Trading — Director Liability
Section 588G of the Corporations Act imposes personal liability on directors who allow a company to incur debts when the company is insolvent (or becomes insolvent as a result). A lawyer advises directors on whether a company is approaching insolvency, available defences (including the safe harbour defence), and restructuring options to limit personal liability.
ASIC Investigations & Compulsory Examinations
ASIC has broad investigative powers — including compulsory examinations (s19 ASIC Act) where a person must attend and answer questions under oath. ASIC can require production of documents, take statements, and refer matters for civil or criminal prosecution. A lawyer provides representation throughout an ASIC investigation — attending examinations, managing document production, and advising on legal rights and obligations.
Breach of Duty Claims — Defending Directors
Where a liquidator, receiver, or aggrieved shareholder brings a claim against a director for breach of their statutory duties, a lawyer defends the claim — assessing the legal basis for the claim, identifying available defences (including the business judgement rule), and representing the director in court proceedings.
ASIC Civil Penalty Proceedings
ASIC can bring civil penalty proceedings in the Federal Court against directors who breach civil penalty provisions of the Corporations Act — including breach of the duty of care and diligence (s180), breach of good faith (s181), and insolvent trading (s588G). Civil penalties can include disqualification from managing corporations, pecuniary penalties, and compensation orders. A lawyer defends directors in civil penalty proceedings.
Director Disqualification — Appeal & Licence Applications
Where a director has been disqualified from managing corporations — by ASIC or court order — a lawyer advises on the appeal process and applications for leave to manage a corporation despite disqualification. ASIC also disqualifies directors on the basis of repeated corporate failures — a lawyer advises on whether automatic disqualification has occurred and how to manage it.
Corporate Governance — Compliance Advice
A lawyer advises companies and directors on Corporations Act compliance — including board governance requirements, conflicts of interest management, related party transaction procedures, disclosure obligations for listed companies (ASX Listing Rules), and ASIC reporting requirements. Proactive governance advice prevents the breaches that trigger ASIC investigations.
What the Law Says
Director duties — the Corporations Act obligations.
Duty of care and diligence — s180
Section 180 of the Corporations Act requires directors and officers to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person in like circumstances would exercise. This is an objective standard — the level of care and diligence required is not determined by the director's own assessment of what is reasonable, but by what a court considers a reasonable person in the same circumstances would do. The duty is continuous — it applies to all decisions the director makes in their capacity as a director, not just the most significant ones.
Duty of good faith — s181
Section 181 requires directors to exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose. The duty requires directors to act in the interests of the company as a whole — not in their own interests, not in the interests of a controlling shareholder, and not for an improper purpose. The most common breach involves a director preferring their own interests over the company's — including taking corporate opportunities for personal benefit, self-dealing on non-arm's-length terms, and voting on matters in which they have an undisclosed personal interest.
Insolvent trading — s588G and the safe harbour
Section 588G imposes personal liability on directors who fail to prevent a company from incurring a debt at a time when the company is insolvent (or becomes insolvent as a result of incurring the debt) and there are reasonable grounds for suspecting insolvency. The safe harbour (s588GA, introduced in 2017) protects directors from personal liability for insolvent trading where they take a course of action reasonably likely to lead to a better outcome for the company than immediate administration or liquidation — and they are properly developing or implementing that course of action. The safe harbour requires genuine restructuring activity — not just delaying the inevitable.
The business judgement rule — s180(2)
Section 180(2) provides a safe harbour from the duty of care and diligence for business judgements made in good faith for a proper purpose where: the director does not have a material personal interest in the outcome; the director informs themselves about the subject matter to the extent they reasonably believe appropriate; and the director rationally believes the judgement to be in the best interests of the company. The business judgement rule protects honest, informed commercial decisions that turn out to be wrong — it does not protect decisions made without proper information, or decisions tainted by personal interest.
ASIC compulsory examinations — your rights
Section 19 of the ASIC Act gives ASIC the power to require a person to appear for examination and answer questions on oath. A person who is the subject of an ASIC investigation — or who is a "connected person" to such a person — can be summoned for examination. A person being examined under s19 is not entitled to claim the privilege against self-incrimination — they must answer questions, including questions the answers to which might incriminate them (though the answers can be excluded in subsequent criminal proceedings in some circumstances). A lawyer attending the examination can advise the client and object to questions on legal professional privilege grounds.
Director identification numbers — DIN requirements
From November 2021, all directors of Australian companies are required to have a Director Identification Number (DIN) — a unique identifier that helps ASIC identify and track directors across their involvement in various companies. New directors must apply for a DIN before being appointed (or within 28 days of appointment during the transition period). Failure to have a DIN is an offence. The DIN system makes it significantly easier for ASIC to identify directors who have been involved in repeated corporate failures and to take action against phoenix activity.
How It Works
One request. Expert director duties advice.
Tell us the situation — ASIC contact, a breach claim, insolvent trading concern, or governance advice. A lawyer experienced in Corporations Act matters contacts you for a free consultation.
Submit Your RequestDescribe the situation
Tell us: whether ASIC has been in contact (examination notice, document request, or investigation notice); whether a breach of duty claim has been made; whether insolvent trading is a concern; or what governance advice you need.
Matched to a Corporations Act specialist
Your request is matched to a commercial lawyer with specific experience in director duties, ASIC investigations, insolvent trading defence, and civil penalty proceedings.
Legal advice and representation
A lawyer assesses the exposure, advises on strategy and available defences, and represents the director through the investigation, examination, or court proceedings.
Common Questions
Director duties — frequently asked questions.
I'm a director of a company that is struggling to pay its debts — what should I do?
Get legal advice immediately. Once a company is or becomes insolvent, each new debt the company incurs can trigger personal liability for directors under s588G. The key questions are: is the company actually insolvent (unable to pay debts as and when they fall due)? Are there reasonable grounds to suspect insolvency? Is there a genuine restructuring pathway that could produce a better outcome than immediate administration? A lawyer assesses the position, advises on the safe harbour defence (if restructuring is genuinely possible), and advises on voluntary administration or liquidation if restructuring is not viable. Directors who get early advice protect their position — those who wait until the company collapses face significantly greater exposure.
ASIC has sent me an examination notice — do I have to attend?
Yes — an examination notice under s19 of the ASIC Act is compulsory. Failure to attend without a lawful excuse is a criminal offence. You are required to answer questions under oath. However, you have the right to have a lawyer present — and exercising that right is strongly recommended. A lawyer attending the examination can: advise you on the legal effect of questions; object on legal professional privilege grounds (where the answer would reveal confidential legal advice); and advise on your rights where a question requires you to provide information that might be used against you. Contact a lawyer as soon as you receive an examination notice — do not wait until the examination date.
Can I be liable for the debts of a company I was only briefly a director of?
Yes — director liability under s588G is not limited by the duration of your involvement. You can be personally liable for debts incurred during any period in which you were a director and the company was (or should have been suspected to be) insolvent. This includes directors who were recently appointed, directors who resigned shortly before the company's collapse (subject to a resignation defence in some circumstances), and shadow directors (persons whose instructions the formal directors were accustomed to act upon). A lawyer assesses the specific period of directorship, the company's financial position during that period, and the available defences to limit exposure.