DIRECTOR’S DUTIES
Directors are in a Fiduciary Relationship with the company
1.	Act Honestly
•	Directors have a duty to act in good faith and in the best interests of the company (s.181(1)(a) Corporations Act)
•	Acting in good faith means behaving honestly and fairly
•	The best interests of the company means the best interests of the shareholders as a collective group (Greenhalgh v Arderne Cinemas Ltd)
2.	Proper purpose
•	Directors have a duty to exercise their powers and discharge their duties for a proper purpose (s.181(1)(a) Corporations Act)
•	Directors breach this duty if they issue shares to create or destroy the voting power of majority shareholders (Howard Smith Ltd v Ampol Petroleum Ltd)
3.	Care, Skill and Diligence
•	Directors have a duty to perform with care, skill and diligence (s.180(1) Corporations Act)
•	A director will breach their duty to exercise care, skill and diligence if they fail to demonstrate the same degree of care, skill and diligence that a reasonable person in the same position and circumstances would have demonstrated
•	All directors must take reasonable steps to place themselves in a position to guide and monitor the management of a company: (Daniels v Anderson)
•	Business Judgement Rule
A director will not be in breach of their duty to exercise care, skill and diligence when making a business judgement (s.180(2) Corporations Act) if they:
o	Make the judgement in good faith for a proper purpose; and
o	Do not have a material personal interest in the subject matter of the judgement; and
o	Inform themselves about the subject matter of the judgement to the extent they reasonably believe to be appropriate; and
o	Rationally believe that the judgement is in the best interests of the company
•	Reliance
It also is reasonable for directors to rely on information or advice provided by others such as company employees or professional advisers but only if the reliance is made in good faith and after making an independent assessment of the information (s.189 Corporations Act) 
4.	Conflict of Interest
•	Directors owe general law and statutory duties to their companies to avoid situations where they have a conflict of interest (ss.181-183 Corporations Act)
•	A director will have placed themselves in a position of conflict if they:
o	Have a personal interest in a transaction with their company
o	Make an undisclosed personal profit from the use of their position
o	Misuse company funds
o	Take up a business opportunity that should have gone to the company
o	Misuse confidential company information
o	Compete with the company
5.	Duty to Prevent Insolvent Trading
•	Directors have a duty to prevent insolvent trading (s.588G Corporations Act)
•	This means that if the company cannot meet its credit obligations the directors are prohibited from incurring further debts
•	A director will have breached their duty to prevent insolvent trading if:
o	They were a director when the company incurred the debt; and
o	The company was insolvent or became insolvent by incurring the debt; and
o	There were reasonable grounds for suspecting insolvency at the time; and
o	The director was aware of those grounds or a reasonable person in the director’s position in similar circumstances would have been aware; and
o	The director failed to prevent the company from incurring the debt
•	A director will have a defence to a breach of their duty to prevent insolvent trading (s.588H Corporations Act) if the director:
o	Expected on reasonable grounds the company would remain solvent; or
o	Reasonably relied on information supplied by somebody else that the company was solvent; or 
o	Did not take part in the management of the company the debt was incurred; or
o	Took all reasonable steps to prevent the company from incurring the debt