As the director of a company, you have the responsibility to fulfill certain obligations and responsibilities. These responsibilities often increase with the size of the company.   

The duties and powers of directors are explicitly set out in the Corporations Act 2001 (Cth). These are:

·      A duty to act with care and diligence and to act in good faith. This means that as a director, you should have honest intentions and should make decisions that have a proper purpose.

·      A duty to disclose any ‘material personal interest’ that relates to the affairs of company. This means that you need to advise the other directors of any conflicting interest you may have which could bias the way you carry out business or vote at director’s meetings. If you are the sole director of a proprietary company, this rule does not apply.

·      You should not improperly use your position as a director of the company to gain a personal interest or to cause detriment to the company.

·      You should not improperly use your access to company information to gain a personal interest or to cause detriment to the company.

·      You should ensure that the company keeps adequate financial records, which must be retained for 7 years.

·      If, as a director, you are also acting as a trustee for the company, you are potentially liable to pay back any debt that the company has incurred.

Many companies have a constitution or a 'list of rules' in place that set out the powers and functions of each of their director/s. As a director, you need to be aware of what is going on in the company and must consider the implications and consequences of each company decision that is made. Remember, as a director, you will likely be dealing with other people’s money and making decisions on their behalf.  

Another important facet of the company which a director is involved in is corporate governance. Corporate governance includes the planning and monitoring of the companies compliance with relevant legislation and rules. This includes the Corporations Act, the OH & S Act and any other laws applicable to the particular business.

Remember, even though, a registered company is a separate legal entity, a director can still be found personally liable if something goes wrong in an organization. For example, if you knowingly allow the company to continue to trade while it is insolvent, you can be found personally liable for the debts incurred and guilty of a criminal offence. This offence can carry heavy fines and even prison time. You may also be liable for losses that have resulted from a breach of your duties.