Taking on a directorship of a company brings many responsibilities including Corporations Law responsibilities, in particular the case where a company is liquidated the liquidator will carefully review the actions of the directors, particularly their management of it’s financial affairs.
Directors may leave themselves open to action by the liquidator if they are derelict in their duties to :
- Prevent insolvent trading by the company i.e. ensuring the company can pay its debts as and when they fall due.
- Act inappropriately in relation to voidable transactions.
- Fail to respond to directors penalty notices issued by the ATO
- Breach common law or equitable duties requiring directors to take into account the
- interest of creditors when the company is insolvent.
Directors can be held personally responsible for insolvent trading unless the director can produce evidence that they acted reasonably and consistently with their duties to ascertain the financial position of the company and without demonstrating that their expectation of solvency was based upon that information.
Readers should not act or rely on this information without first seeking out professional advice concerning their particular circumstances