Corporations Law and Directors Duty Disputes
Aptum are experts in the obligations of companies and their directors. When those obligations are breached, or when the company is on the receiving end of the breach, we run the matter to a commercial outcome.
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
Featured client testimonials
"Experts in their field, empathetic and dedicated to achieving our desired outcome with kindness and ease in communication."
"[Aptum is] incredibly responsive, personalised and empathetic. They are a highly intelligent team with a strong understanding of the law. Provides both sound legal and practical commercial advice."
What are directors' duties in Australia?
Directors of Australian companies owe four core statutory duties under the Corporations Act 2001 (Cth), sitting on top of the common law and fiduciary duties owed to the company:
- Care and diligence (section 180). A director must exercise the care and diligence that a reasonable person would exercise if they were a director of a company in the same circumstances.
- Good faith and proper purpose (section 181). A director must exercise their powers and discharge their duties in good faith in the best interests of the company and for a proper purpose.
- Improper use of position (section 182). A director must not improperly use their position to gain a personal advantage or cause detriment to the company.
- Improper use of information (section 183). A director must not improperly use information obtained through their position to gain a personal advantage or cause detriment to the company.
Sitting alongside these are the fiduciary duties owed at general law (to avoid conflicts of interest, not to profit from the position without consent, to act only in the company's interests), the specific duty not to trade while insolvent (section 588G), and duties around related party transactions (Chapter 2E).
Breach of these duties exposes the director personally — through civil penalty proceedings brought by ASIC, compensation claims brought by the company or its liquidator, or disqualification from managing corporations. Directors can also be exposed to criminal prosecution where the breach is dishonest.
Aptum runs Corporations Act disputes on both sides of the ledger — for the company or the liquidator pursuing the director, and for the director defending the claim.
Where Aptum runs Corporations Law and directors duty disputes
-
01
Section 180 care and diligence claims.
Claims that a director failed to exercise reasonable care in a specific decision (approving a transaction, signing a document, releasing an announcement to the ASX). These are the most heavily-litigated directors' duties claims and turn on what a reasonable director in the same circumstances would have done.
-
02
Section 181, 182 and 183 good faith and improper use claims.
Claims that a director acted in bad faith, for an improper purpose, or improperly used their position or information for personal gain. Common triggers are related party transactions, taking corporate opportunities, and directors of both sides of a JV making decisions that favour one side.
-
03
Insolvent trading (section 588G) claims.
Liquidator claims against directors for debts incurred while the company was insolvent or on the reasonable grounds to suspect it was. Defended most often through the safe harbour provisions (section 588GA) or by challenging the causation and insolvency evidence.
-
04
Safe harbour applications and defences.
Advice on structuring a restructuring or turnaround plan to attract safe harbour protection, and defence of insolvent trading claims on the basis that the safe harbour applies.
-
05
Breach of fiduciary duty claims.
Common-law fiduciary breach claims (avoidance of conflict, no-profit rule, no-benefit rule) run alongside or in place of the statutory duties. Often the more useful pathway for equitable remedies (constructive trust, account of profits).
-
06
Corporate opportunity and confidential information claims.
Claims that a director or senior employee diverted a business opportunity to themselves or a new venture, or used confidential company information (customer lists, price lists, technology, trade secrets) to compete against the company. The preserved case study below is exactly this pattern.
-
07
Misleading and deceptive conduct (section 18 ACL, section 1041H Corporations Act).
Claims by counterparties, investors or purchasers that a company or director made a misleading representation in trade or commerce. Runs commonly with sale-of-business, capital-raising and financial services disputes.
-
08
Sale of business disputes.
Post-completion disputes over warranty and indemnity claims, earn-out disputes, non-disclosure claims, and disputes over the operation of restraint clauses. Overlap with our Financial Services and Securities Litigation service where a business sale involved financial products.
-
09
Statutory derivative actions (section 237).
Applications by a shareholder for leave to bring proceedings in the company's name against directors or third parties where the company itself won't sue. Aptum runs both the leave application and the substantive proceedings.
-
10
Oppression and unfair prejudice (section 232).
Cross-referred to our Shareholder and Partnership Disputes service, which handles the closely-held company variant of these claims.
-
11
ASIC investigations, civil penalty proceedings and disqualification.
Response to ASIC section 19 examination notices, section 33 production notices, defence of civil penalty proceedings under Part 9.4B, and defence of ASIC applications to disqualify a director under section 206C or 206E.
-
12
Related party transaction disputes (Chapter 2E).
Claims arising from transactions between a public company and its related parties without member approval, or where the disclosure to members was inadequate.
-
13
Trustee company disputes.
Where the company acts as trustee, the interplay between the trustee's rights of indemnity and the beneficiaries' rights against the trustee often produces litigation that has both corporate and trust dimensions.
-
14
Phoenix activity claims.
Claims arising where a company is stripped of assets and abandoned or liquidated, with a new "phoenix" entity carrying on the business without the debts. Aptum acts for creditors pursuing the phoenix and for directors defending accusations of phoenix conduct.
CEO of a pioneering Australian brand successfully prevents senior employees from using company IP to harm the business
Problem. The CEO of a pioneering Australian brand approached Aptum to assist with a workplace investigation into the conduct of several senior employees, who were believed to have inappropriately used company resources.
Aptum's role. Aptum's investigation process helped the CEO uncover the nature of the employees' misconduct and map a pathway for resolving the problem.
The employees had used the company's resources and confidential information to commence a new enterprise for their own benefit.
This led Aptum to first advise on the termination of the senior employees, before turning to the CEO's other dispute resolution objectives.
Following their termination, Aptum commenced proceedings in the Federal Court of Australia against the senior employees and the new enterprise, seeking compensation and specific performance for the senior employees to transfer the IP of the new enterprise back to the company.
In doing so, Aptum performed a dual role in leading the legal strategy as well as engaging in regular contact with the CEO to help consolidate the governance of the business.
Outcome. Whilst the outcome is confidential, this dispute was resolved in a way that successfully met the client's objectives.
This engagement demonstrates Aptum's capability to find broad commercial outcomes in proceedings regarding breaches of duties by senior employees that involve significant procedural, factual and legal complexity.
What stage is your matter at?
Where the matter sits determines which Aptum service is the right fit.
I'm a director facing an allegation of breach of duty, an ASIC notice, or a liquidator claim.
This is the right page. Aptum runs the defence of directors' duties, insolvent trading, oppression and ASIC matters.
I'm a company or shareholder pursuing a director for breach of duty.
This is also the right page. We run the prosecution of Corporations Act claims, statutory derivative actions and common-law fiduciary claims.
The dispute is between shareholders or partners about control of the company.
You need our Shareholder and Partnership Disputes service. Oppression, unfair prejudice, and buy-out disputes sit there.
The company is a financial services licensee and the dispute involves ASIC, APRA or AFCA.
You need our Financial Services and Securities Litigation service. Financial services corporate matters run under the sector-specific frame.
A liquidator is pursuing me or my company for unfair preferences or insolvent trading.
This is the right page. Aptum defends liquidator claims and negotiates commercial resolutions with insolvency practitioners.
The company has received an ATO Director Penalty Notice.
You need our Director Penalty Notices service. The 21-day window is statutory and short.
I'm not sure which category I'm in.
Book the value conversation below. We sort the pathway in the first meeting.
What Aptum brings to Corporations Law matters
Nigel Evans
Nigel Evans, Aptum's Managing Director and Co-Founder, leads Aptum's Corporations Law practice. Before founding Aptum, Nigel spent 11 years at the commercial Victorian Bar, where much of his practice involved directors' duties, oppression, and corporate governance disputes. He is listed in Best Lawyers in Australia for Commercial Litigation (2026) and recognised by Doyle's Guide as a Leading Commercial Litigation and Dispute Resolution Lawyer.
David Adason
Nigel is supported by David Adason, Aptum's Associate Director. David has practised commercial litigation exclusively across his career, including a period as Associate to a Justice of the Federal Court of Australia. Doyle's Guide has recognised David as a Rising Star in Commercial Litigation and Insolvency Law — directly relevant to insolvent trading claims, liquidator recoveries, and the intersection between directors' duties and insolvency. David architected Aptum's project management framework, which runs every matter under a documented timetable.
That combination of Federal Court advocacy experience and Insolvency Law recognition is directly relevant to how these matters are run.
The Federal Court is where most of this work happens
Civil penalty proceedings under Part 9.4B, statutory derivative action applications, ASIC enforcement proceedings, insolvent trading claims of any size, and most cross-jurisdictional Corporations Act matters sit in the Federal Court. David's Federal Court practice depth means the case is run the way the Court expects to see it.
Directors' duties cases are decided on the reasonable director standard
Section 180 turns on what a reasonable director in the same circumstances would have done. That is a factual question won on the evidence — the board papers, the minutes, the emails, the advice the director received or should have received. We build directors' duties cases around the contemporaneous record from the diagnostic call onward.
Safe harbour needs to be structured, not just invoked
The safe harbour provisions (section 588GA) are not a defence you get automatically. They require the director to have started developing "one or more courses of action that are reasonably likely to lead to a better outcome for the company," and to have met specific tax and payment obligations. We advise on how to structure the restructuring so the safe harbour is actually available if a claim later arises.
What makes Aptum different
Specialist expertise
All we do is litigate complex 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.
Recent matter outcomes
-
01
CEO of a pioneering Australian brand successfully prevents senior employees from using company IP to harm the business
See the case study above. Federal Court proceedings against former senior employees who diverted a business opportunity, resolved on terms that met the client's objectives.
-
02
A company seeks recovery of funds committed without authority
A company became involved in a dispute after an individual purported to commit it to a significant commercial arrangement without proper authority. Aptum pursued claims to recover funds and challenge the validity of the transactions, while managing related proceedings involving competing claims over company assets. Aptum protected the company's interests and advanced coordinated proceedings designed to recover substantial funds and clarify the limits of directors' authority.
-
03
A director responds to allegations of fiduciary and statutory breaches
A director faced claims arising from the management of investment entities, including allegations of breaches of fiduciary and statutory duties and claims involving substantial financial loss. Aptum developed a strategy to assess the allegations, manage the client's litigation risk and progress the matter towards a commercially sensible resolution. Aptum helped the client navigate a complex corporate dispute involving significant financial exposure while protecting their position throughout the proceedings.
What happens when you engage Aptum
Aptum runs every matter under our project management framework, with clear expectations on timing, cost and scope from the first call. Before you pay us anything, you get a free value conversation so you know exactly where you stand. No surprises.
Value conversation (free)
You come in for a conversation, in person or over Teams, with the practice lead who would run your matter and your client experience coordinator. You tell us what has happened — the notice you received, the allegation being made, the transaction being challenged, or the conduct you're investigating. We tell you whether the case is genuinely defensible or prosecutable, what the realistic outcomes are, and what to expect on cost, timing and scope if you engage us. Real expertise from a senior practitioner before you commit to anything, not a fake triage.
Pathways assessment
Once you engage, you receive a documented strategy and a cost forecast aligned to the stages of your matter. For Corporations Law matters that typically means identifying the specific statutory duty in play, mapping the evidence you'll need (board papers, financial records, contemporaneous advice), deciding on the forum (Federal Court or a state Supreme Court), and (where relevant) coordinating with the ATO, ASIC or an appointed liquidator.
Execution
This is the phase for pleadings, discovery, expert evidence, mediation, and either settlement or trial. Where the matter involves an ASIC investigation running in parallel, execution also covers section 19 examinations, notice responses and civil penalty defence. Routine documented strategy. Regular communications. A relentless focus on the essential issues.
How we manage cost
Corporations Law disputes cover a wide cost range, from a defended s180 care and diligence claim to a multi-year insolvent trading proceeding with several directors. What we commit to is one of our five client service promises: clear expectations as to the timing, costs and scope of our engagement, and updating those expectations as early as possible if anything changes.
Value conversation.
A free conversation with the practice lead to work out what you're facing, whether the case is realistic, and what your options are.
Estimate and scope.
Once engaged, you receive a documented strategy and a cost forecast aligned to the stages of your matter. Stage-based budgets, regular reporting, and any scope changes documented and agreed in writing.
Litigation funding options.
Where the case has strong prospects and adequate quantum, Aptum can put a funded structure in front of you at the value conversation. Funded matters are structured to preserve the client's control of the case.
D&O insurance coordination.
Where the director is covered by a Directors and Officers policy, coordinating with the insurer from an early stage is crucial. We work with the insurer under the policy notification and claim-handling terms so that the defence is funded properly and no coverage argument arises down the track.
Investment mindset.
Aptum approaches every matter with an investment mindset: the most practical outcome in the shortest possible time, at the least possible cost, with the biggest possible return.
Frequently asked questions
-
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 are the four core directors' duties under the Corporations Act?
Section 180 (care and diligence), section 181 (good faith and proper purpose), section 182 (no improper use of position for personal advantage), and section 183 (no improper use of information for personal advantage). These sit alongside common-law fiduciary duties and the specific duty not to trade while insolvent (section 588G).
-
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, and 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?
Yes. A 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; and 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 become 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 or limit the trustee company's rights to be indemnified against the liabilities); and 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 facto 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 facto 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 directors 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 alternate 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 section 588 of the Corporations Act, such as continuing to meet tax reporting obligations. Ensure that you understand the extent of these obligations before relying on the safe harbour protections.
-
What is a statutory derivative action?
A statutory derivative action is a proceeding brought by a shareholder (or in some cases a former director) in the company's name, where the company itself will not or cannot sue. It requires leave of the court under section 237 of the Corporations Act, and the applicant must satisfy the court that the company will not bring the proceedings itself, that the applicant is acting in good faith, and that the proceedings are in the company's best interests.
-
Can I claim on my D&O insurance policy?
Yes, in most circumstances, provided the policy is on foot, the matter is notified within the notification window, and the conduct alleged is not excluded (typically dishonesty and fraud are excluded). D&O coordination from the earliest stage of a matter is crucial — Aptum works with D&O insurers under the policy notification and claim-handling terms to ensure the defence is funded properly and no coverage argument arises later.
Offices
Aptum services Corporations Law and directors duty clients across Australia from three offices.
Thinking on corporations law and directors duty disputes
Aptum publishes regularly on directors' duties, insolvent trading, safe harbour, and Corporations Law disputes.
Get clarity on your Corporations Law matter
Directors' duties disputes move fast once they crystallise. The board papers, contemporaneous advice, and the record of what the director actually knew all matter. Getting the strategy right early is often the difference between a defensible position and a defended judgment.
In a free value conversation, Aptum's Corporations Law team will tell you exactly where you stand, whether the case is genuinely contestable, and what the pathway to a commercial outcome looks like. No surprises.
Call (03) 7020 9230
Book your value conversation