Corporations Law and Directors Duty Disputes

Aptum are experts in the obligations of companies and their directors.

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Disputes involving directors and company obligations can have significant and broad impacts on a business.

Directors owe statutory duties to a company under the Corporations Act.

Failure to meet these obligations can result in criminal and civil sanctions, disqualification from directorship, and broader commercial consequences such as damage to the company’s reputation and important relationships with investors and regulators.

To avoid and navigate these wider consequences caused by the misconduct of a company or its directors, it is preferable to address any concerns at the earliest possible stage.

How can Aptum help?

Aptum’s capability in early and ongoing risk assessment provides an important focus on only the key issues that bring commercial outcomes.

Aptum, its directors, and wider team have broad experience in a range of disputes involving Corporations Law and Directors Duties – they are among the most common disputes we handle.

Aptum’s expertise includes: 

  • Contract disputes 
  • Australian consumer law claims 
  • Sale of business disputes 
  • Claims relating to director liability and misconduct 
  • Claims relating to breaches of confidence and stolen business opportunities 
  • Misleading and deceptive conduct 
  • Breaches of fiduciary duties 

What Makes Aptum Different

Specialist expertise

An exclusive focus on commercial and tax disputes.

Legal intelligence framework

Practical, ongoing risk assessment to focus on the essential.

Project management framework

Routine documented strategy through custom project management.

Case Study

Protecting a director against large-scale litigation

Problem: The former director of an energy company was faced with large-scale litigation for alleged breach of directors duties in relation to various transactions entered into with other former directors of the Company.

Aptum’s role: Aptum was engaged to protect the director against the attraction of personal liability.

Outcome: Whilst simultaneously minimising the risk of our client’s insurance policy being inapplicable, Aptum executed a litigation strategy that led to a resolution following a mediation – preventing the time and cost of trial. The matter was one of the first instances of insurers as joint defendants in Australia.


Select Team Members

Nigel Evans Managing Director
David Adason Associate Director
Emma Soulsby Practice and Projects Manager
Nikolas Kalcic Senior Associate

What Our Clients Say About Aptum

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  • What are fiduciary duties?

    A fiduciary duty exists when one person (the fiduciary) owes legally binding obligations to another (the principal or beneficiary). They exist to provide legal protection to parties in relationships of trust and where vulnerability may exist, such as a financial advisor and a client, or a director and their company.

    Where a fiduciary relationship exists, fiduciary duties define how the fiduciary must not act against the best interests of the principal.

    These duties include: 

    • to avoid a position of conflict or self-interest; 
    • not to make a profit from the principal’s trust; and 
    • not to act for one’s own personal benefit or for the benefit of a third party without the consent of the principal.  


    There are a set of fiduciary relationships that are generally recognised by the court. However, the court can also determine that a fiduciary relationship exists if one party has agreed to act in the best interests of the other – this is known as an ‘ad hoc’ fiduciary relationship.

  • What is misleading or deceptive conduct?

    Australian Consumer Law (ACL) establishes that businesses must not engage in conduct that is likely to lead another party into an error (mislead), or deliberately leads another party into an error (deceive). There are harsher penalties for conduct that is deceptive.

    Section 18 of the ACL states that “a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

    Misleading or deceptive conduct can arise in a wide range of commercial circumstances, such as through: 

    • Negotiating a contract with another business 
    • Failing to disclose information to regulators 
    • Packaging or labelling of products 
    • Marketing or advertising of goods and services 
    • The sale of goods and services to customers 
    • Failing to provide relevant information to customers 
    • Making misleading predictions and opinions
  • Can misleading and deceptive conduct occur by omission?

    Yes. Silence can be deemed as misleading or deceptive. If you omit information that someone ought to have known, you may be in breach of the ACL.

    For example, in the sale of a business, neglecting to disclose the existence of an important debt can be considered misleading or deceptive, even if the majority of other debts and financial information are disclosed.

  • Is there a limitation period for misleading and deceptive conduct?

    YesA claim can be made within six years of the occurrence of misleading or deceptive conduct.

  • What are the potential consequences for a breach of directors’ duties?

    If it is established that a breach of directors’ duties has taken place, consequences for the director can include:  

    • Civil action brought by the company, or its creditors, seeking compensation orders against directors who have breached their duties 
    • Both ASIC and the Courts have the power to disqualify directors from their position 
    • Civil penalties under the Corporations Act 2001 (Cth), such as fines 
    • Criminal sanctions under the Corporations Act 2001 (Cth) such as significant fines and/or imprisonment 
    • Broader commercial and financial consequences such as through damage to the business’s reputation and relationships
  • When can a director be held personally liable for company losses?

    Whilst directors are separate entities to companies, there are circumstances in which directors can becoming personally liable for company debts and losses.

    These include: 

    • Insolvent trading: continuing to incur debts or trade whilst the business is unable to pay its debts as and when they fall due. 
    • Causing loss through breach of duties: acting in breach of civil and criminal provisions of the Corporations Act 2001 (Cth) which causes the company to suffer loss 
    • Failing to meet tax obligations: if you fail to ensure that the company’s tax and super obligations are reported and paid on time, the ATO can take action to recover this debt through its director penalty regime. 
    • Debts incurred by companies acting as trustees, if the trustee company breaches the terms of the trust, acts outside its scope of powers, or the terms of the trust deny/limit the trustee company’s rights to be indemnified against the liabilities. 
    • Illegal phoenix activity, which occurs when a company is liquidated, wound up or abandoned to avoid the repayment of its debts and a new ‘phoenix’ entity is started to continue the same company activities without the liabilities of its predecessor. 


    Note also that as a director, your obligations to the company can continue even after the company has ceased trading or is deregistered. 

  • What are ‘shadow directors’ and ‘de factor directors’ and what are the risks?

    A shadow director is someone who has not been officially appointed to directorship, but on whose advice or instructions other directors or board members are accustomed to acting. 
    A ‘de facto director’ is someone who has not been officially appointed to directorship, but effectively acts as if they were in the position, such as by making top-level management decisions.  

    If the court takes the view that you are a shadow or de factor director, then you
    are subject to obligations under the
    Corporations Act 2001 (Cth) as if you were a director and can face the same consequences for breaching those duties.

  • What is an ‘alternate director’ and what are the risks?

    If a company’s director/s are absent, it may be appropriate to appoint a temporary (or ‘alternate’) director to fulfil their role for a set period of time, such as by attending board meetings. The appointment of an alternative director must take place in writing and notification be provided to ASIC. The appointing director may cancel the alternate’s appointment at any time. 
    When acting as an alternate director, you are subject to obligations under the Corporations Act 2001 (Cth) as if you were a director and can face the same consequences for breaching those duties.

  • What are the ‘safe harbour’ protections for directors?

    The safe harbour provisions allow directors of companies experiencing financial hardship alternative options to the appointment of an administrator or liquidator.

    In 2017, amendments were introduced to the Corporations Act 2001 (Cth) to protect directors from the attraction of personal liability for taking on debts whilst insolvent if they are in the course of pursuing a course of action that is reasonably likely to lead to a better outcome for the company and its creditors.  
    The safe harbour protections only include debts incurred in relation to this restructuring/ turnaround period and carry other requirements under s 588 of the Corporations Act (Cth), such as continuing to meet tax reporting obligations. Ensure that you understand the extent of these obligations before relying on the safe harbour protections.

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