Corporations Act. Australia
Good faith, use of position and use of information — criminal offences
Good faith — directors and other officers
(1) A director or other officer of a corporation commits an offence if they:
(a) are reckless; or
(b) are intentionally dishonest;
and fail to exercise their powers and discharge their duties:
(c) in good faith in the best interests of the corporation; or
(d) for a proper purpose.
Note: Section 187 deals with the situation of directors of wholly‑owned subsidiaries.
Use of position — directors, other officers and employees
(2) A director, other officer or employee of a corporation commits an offence if they use their position dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
Use of information — directors, other officers and employees
(3) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation commits an offence if they use the information dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
185 Interaction of sections 180 to 184 with other laws etc.
Sections 180 to 184:
(a) have effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation; and
(b) do not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a).
This section does not apply to subsections 180(2) and (3) to the extent to which they operate on the duties at common law and in equity that are equivalent to the requirements of subsection 180(1).
186 Territorial application of sections 180 to 184
Sections 180 to 184 do not apply to an act or omission by a director or other officer or employee of a foreign company unless the act or omission occurred in connection with:
(a) the foreign company carrying on business in this jurisdiction; or
(b) an act that the foreign company does, or proposes to do, in this jurisdiction; or
(c) a decision by the foreign company whether or not to do, or refrain from doing, an act in this jurisdiction.
187 Directors of wholly‑owned subsidiaries
A director of a corporation that is a wholly‑owned subsidiary of a body corporate is taken to act in good faith in the best interests of the subsidiary if:
(a) the constitution of the subsidiary expressly authorises the director to act in the best interests of the holding company; and
(b) the director acts in good faith in the best interests of the holding company; and
(c) the subsidiary is not insolvent at the time the director acts and does not become insolvent because of the director’s act.
188 Responsibility of secretaries etc. for certain corporate contraventions
Responsibility of company secretaries
(1) A secretary of a company contravenes this subsection if the company contravenes any of the following provisions (each of which is a corporate responsibility provision):
(a) section 142 (registered office);
(b) section 145 (public company’s registered office to be open to public);
(c) section 146 (change of principal place of business);
(d) section 178A (change to proprietary company’s member register);
(e) section 178C (change to proprietary company’s share structure);
(f) section 205B (lodgement of notices with ASIC);
(g) section 254X (issue of shares);
(h) section 319 (lodgement of annual reports with ASIC);
(i) section 320 (lodgement of half‑year reports with ASIC);
(j) section 346C (response to extract of particulars);
(k) section 348D (response to return of particulars);
(l) section 349A (change to proprietary company’s ultimate holding company).
Note: 1: See section 204A for the circumstances in which a company must have a secretary.
Note: 2: This subsection is a civil penalty provision (see section 1317E).
Responsibility of directors of proprietary companies
(2) Each director of a proprietary company contravenes this subsection if:
(a) the proprietary company contravenes a corporate responsibility provision; and
(b) the proprietary company does not have a secretary when it contravenes that provision.
Note: 1: See section 204A for the circumstances in which a company must have a secretary.
Note: 2: This subsection is a civil penalty provision (see section 1317E).
Defence of reasonable steps
(3) A person does not contravene subsection (1) or (2) in relation to a company’s contravention of a corporate responsibility provision if the person shows that he or she took reasonable steps to ensure that the company complied with the provision.
189 Reliance on information or advice provided by others
If:
(a) a director relies on information, or professional or expert advice, given or prepared by:
(i) an employee of the corporation whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned; or
(ii) a professional adviser or expert in relation to matters that the director believes on reasonable grounds to be within the person’s professional or expert competence; or
(iii) another director or officer in relation to matters within the director’s or officer’s authority; or
(iv) a committee of directors on which the director did not serve in relation to matters within the committee’s authority; and
(b) the reliance was made:
(i) in good faith; and
(ii) after making an independent assessment of the information or advice, having regard to the director’s knowledge of the corporation and the complexity of the structure and operations of the corporation; and
(c) the reasonableness of the director’s reliance on the information or advice arises in proceedings brought to determine whether a director has performed a duty under this Part or an equivalent general law duty;
the director’s reliance on the information or advice is taken to be reasonable unless the contrary is proved.
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