Business Entities - Director's Duties Common Law

• Corporate Governance: describes the way companies are directed and managed. It is concerned with:

o Monitoring and reviewing exercise of powers by decision makers

o Providing incentives for directors to act in the best interests and discourage harming the company]

• Best Practice (ASIC recommendations):

o Majority of Board should be NED’s, Chair should be an independent director, Audit Committee should consist of NED’s (majority of which are independent), Remuneration Committee should pay fairly and responsibly, Nomination Committee should plan for succession and Risk Management Committee should identify, assess, monitor and manage risks.

Statutory Requirements

• S 201A(1): A proprietary company must have at least one director.

• S 201A(2): A public company must have at least three directors (with at least two ordinarily residing in Australia)

To be appointed as a director, a person must:

o S 201D: Consent to appointment

o S 201B(1): Be an individual (not company), at least 18 years old

o S 201B(2): Not be disqualified from being a director (unless granted by ASIC/Court)

• De Facto: a person appointed to the position of a director, but is not described as a director or, a person who acts in the position of a director but is not validly appointed as a director.

• Shadow Director: person not validly appointed as a director, but who other directors are accustomed to act in accordance with.

Types of Directors

1. Executive: a director and