Being A Director – Managing The Risks

With the soon to be enacted Director Penalty Regime to be extended to GST, directors need to take steps to manage the risks of being a director.

Directors face a myriad of potential risks including:

• Breach of directors’ duties
• Insolvent trading
• Director Penalty Notices for unpaid PAYG(W), Superannuation Guarantee Contributions and soon to be enacted GST liabilities
• Personal guarantees being called in
• Breach of duties when acting as a director of a trustee company
• Breach of other laws (workplace health & safety, environmental, competition and consumer etc.)

Asset Protection for Directors

There are a number of steps that can be taken to mitigate these risks, including:

• Directors’ Insurance and Indemnities
• Careful consideration of who is a director of the company (e.g. both husband and wife should not necessarily both be directors
• Consideration of personal assets of directors
• Various strategies to protect personal assets

Other Obligations

Directors owe a duty to the company, creditors, employees and shareholders.

It is ultimately the director’s responsibility to act in good faith and be aware of their obligations.

Guidance and advice from a good accountant and lawyer is also important.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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