If you have just been appointed, or you are about to accept an appointment, the question is not only "what are my duties" but "how would I show, later, that I met them". This guide maps each core director duty to the kind of evidence a small company can realistically keep. It is general information about Australian company officeholder obligations, not legal advice.
Start with the appointment itself
Your duties begin with a valid appointment, and part of that is paperwork you do not personally control. ASIC states that your company must get, and keep, written and signed consent from you before you are appointed as a director or secretary (ASIC). That consent is also the record that you actually agreed to hold the office.
Practical step: before the appointment is lodged, ask for a copy of the signed consent and store it in the company register. If you were appointed years ago and no consent exists, note that gap now and raise it with the company secretary or your adviser — do not assume it was handled.
Confirm these appointment basics:
- Your recorded date of appointment on the ASIC company record.
- Your registered residential or service address, and that changes are lodged within the required timeframe.
- Your director identification number is current.
- Whether you are also a secretary, a shadow director, or an alternate director — each label changes what duties attach to you.
The core duty: act in the best interests of the company
ASIC describes a company director's main responsibility as acting in the best interests of the company and its shareholders, while ensuring the company operates legally and ethically (ASIC). Everything else is an application of that idea.
Two things follow. First, "best interests of the company" is not the same as the interests of whoever appointed you, or of one shareholder group. If you were nominated by an investor or a family member, your duty runs to the company. Put any conflict on the record early, and step out of decisions where your judgement could be compromised.
Second, good intentions are not a defence on their own. What matters later is the reasoning you used, which means contemporaneous minutes, board papers, and the questions you asked.
ASIC also directs officeholders to understand and follow all the laws that apply to your company, not just the Corporations Act (ASIC). In practice a small company rarely touches only one statute. Depending on the business, obligations can also arise under tax law, workplace and work health and safety law, privacy law, consumer law, environmental rules, and any industry licensing regime. Make a written list of the laws you think apply, review it annually, and record that review.
Where duties actually bite: solvency, care and disclosure
The areas below are where disputes and regulatory attention tend to land, even for small companies. Each row pairs the duty with a record you can keep.
| Duty in practice | Evidence worth keeping |
|---|---|
| Monitor solvency, not just profitability | Monthly management accounts, cash-flow forecasts, and board minutes recording that solvency was discussed and what assumptions were used |
| Act with care and diligence | Board papers circulated before meetings, and minutes showing questions asked, not just resolutions passed |
| Avoid and disclose conflicts | A standing conflicts register, plus declarations at the start of each meeting where a conflict exists |
| Do not misuse position or information | A written policy on using company information, and a record of any approval given for a related-party transaction |
| Keep financial records that explain the business | reconciled accounts, source documents retained for the statutory period, and a documented closing timetable |
| Meet whistleblower obligations | A written whistleblower policy and a record of staff access to it — ASIC notes that company officeholders have obligations under laws about whistleblowers (ASIC) |
The solvency row deserves emphasis. Profit is an accounting result; solvency is the ability to pay debts as they fall due. A profitable company can be insolvent if its cash is locked up in stock or unpaid invoices. Directors who keep only an annual profit figure, and no cash-flow view, have little to rely on if trading later becomes difficult.
Mindset: intent, not just technical compliance
There is a useful principle in guidance published by the Department of Finance. In exercising powers in compliance with their fiduciary obligations, directors should look at the underlying intent of the guidance and minimum requirements and not just technical compliance (Department of Finance).
That guidance is written for directors of Commonwealth Government Business Enterprises, so it is not binding on a private company. But the habit transfers well. Ask "what is this rule trying to protect?" If you keep a register only because someone told you to, and it is never updated, the existence of the register proves very little. A register that is actually used in decisions is evidence.
In practice this means recording the reason for a decision, especially unpopular ones. A short entry — "considered option A and B, rejected A because forecast cash flow could not support it, signed: [director]" — carries more weight later than a page of unresolved discussion.
A quarterly compliance pack for a small company
Small companies fail on evidence largely because records are scattered across email, accounting software and a filing cabinet. Put one folder per financial year and file these items after each board or director meeting and at quarter end.
Governance folder
- Signed consent to act, and updated details for every director and secretary.
- Agenda and board papers for each meeting.
- Minutes, approved and signed, recording both decisions and dissent.
- Conflicts register, updated at least annually and on any change.
- Register of delegated authorities: who can commit the company, borrow, or sign contracts, and up to what amount.
Financial folder
- Monthly or quarterly management accounts.
- Cash-flow forecast covering at least three months forward.
- Aged payables and receivables.
- Tax lodgement confirmations and payment records.
Operational folder
- Current licences, permits and registrations, with renewal dates.
- Insurance policies and expiry dates.
- Whistleblower policy and evidence it was circulated.
- The list of applicable laws, dated, with the date of last review.
One person should own each folder, even in a two-director company. "Everyone owns it" usually means nobody does.
Common gaps to look for first
If you are reviewing an existing company rather than starting fresh, check the easy failures before commissioning anything new:
- No signed consent on file for one or more current officeholders.
- Minutes that do not exist for decisions already made, particularly loans, dividends, or asset purchases.
- ASIC records that are stale — old addresses, former directors, or a company name that changed without lodgement.
- No cash-flow forecast, only a profit and loss statement.
- Related-party dealings such as director loans or rent paid to a director, never documented or approved.
Each one is fixable. None of them improves by being ignored.
Things you should verify yourself
The regime changes, and thresholds and penalties are set by Parliament and administered by regulators. Confirm each of the following against the current official source, or with a qualified adviser, before relying on it:
- The statutory duties sections and civil penalty provisions in the Corporations Act 2001, including how "care and diligence" and "good faith" are framed in the current text, via the Federal Register of Legislation.
- The current penalties, disqualification periods and defences available to directors, which ASIC summarises and which change over time.
- The insolvent trading provisions and safe harbour rules, including any requirement that a plan be documented to qualify.
- Whether your company is small enough to be treated differently for any reporting obligation, and whether your industry adds licensing duties on top.
- Whether you are a director of the corporate trustee of a trust, which is common in small business and carries additional practical risks.
Do not assume that another company's compliance template fits yours. A single-director family company, a startup with external investors, and a company acting as trustee have different pressure points.
Next steps
Work through this sequence over your next two board cycles.
- Retrieve your signed consent to act, and note whether one exists for every officeholder.
- Pull your ASIC company record and compare it line by line with your own understanding of who holds office and where they live for the register.
- Build one cash-flow forecast for the next three months if none exists, and table it at your next meeting.
- Open the governance, financial and operational folders described above and name an owner for each.
- Write down the laws you believe apply beyond the Corporations Act, then test that list with your accountant or lawyer.
Keep the output simple and dated. A one-page solvency note signed each month is more useful than a policy nobody has read since it was written.
For related reading on Australian home lending decisions, see /money/home-loans/. To compare options across the Australian market, /match/ may help.
This article is general information for people involved with Australian companies. It is not legal, tax, financial or accounting advice, and it does not account for your circumstances. Director duties are set out in statute and case law and can carry personal liability and civil or criminal penalties. Before acting, verify current requirements with ASIC, the Federal Register of Legislation, or a qualified Australian legal or accounting adviser.