Director Disputes

Any dispute involving the directors can hinder your company’s success and impair its stability and reputation. That’s why it must be resolved as quickly and effectively as possible. Gibbs Wright Litigation Lawyers can help.

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Do you need a corporate litigation lawyer for director disputes?

A director dispute is a disagreement between directors, or between shareholders and directors, of a company. These disputes are fairly common in businesses and can arise typically due to:

  • differing visions for the company's future
  • disagreements over financial decisions
  • concerns about ethics or legal compliance
  • personal conflicts among directors
  • breach of fiduciary duties
  • breakdowns in communication and more
These disputes can hinder effective decision-making, create uncertainty within the company, and harm its overall stability and reputation.

Such disputes can also become complex, especially if the directors are also shareholders of the company. That’s why you’ll need experts in corporation law like Gibbs Wright Litigation Lawyers to handle the business for you.

We can help resolve your dispute either by seeking amicable resolutions through mediation and negotiation or by representing you in court if litigation becomes necessary.

Our corporate litigation lawyers will devise a strategic legal approach to help you navigate the complexities of these disputes, minimise your risks, and maximise your prospects of achieving a favourable outcome for your case. Speak with us today to know where you stand.

How to get started

Litigation can be complex and daunting, but we’ll make the process easier for you. Book a complimentary call today.

1

Tell us your
legal matter

Speak to one of our litigation lawyers via phone for free and provide the necessary details and documents so we can better understand your situation.
2

We’ll let you know
where you stand

If we think that you have a good argument, we’ll devise a strategy for you on how we will take on your matter, and give you legal guidance and a fee estimate. All for free.
3

You Decide

It’s ultimately your decision whether to hire us or not based on the strategy and fee estimate we gave you. There’s no obligation and no pressure to proceed.
1

Tell us your legal matter

Speak to one of our litigation lawyers via phone for free and provide the necessary details and documents so we can better understand your situation.
2

We’ll let you know where you stand

If we think that you have a good argument, we’ll devise a strategy for you on how we will take on your matter, and give you legal guidance and a fee estimate. All for free.
3

You Decide

It’s ultimately your decision whether to hire us or not based on the strategy and fee estimate we gave you. There’s no obligation and no pressure to proceed.

Why Gibbs Wright

Our team of litigation lawyers are committed to protecting your rights and getting the best possible outcome for your situation.

What we do is very simple: we sue people, defend people when they get sued and negotiate resolutions to disputes to prevent proceedings from commencing. It’s the only thing we do and we do it really well.

Having done this for many years, we know the law and the legal processes like the back of our hands. But more importantly, we know how to win. No matter the industry you’re in or how complex your situation is.
When we take on your legal matter, you know that our team of expert litigation lawyers will fight for you not just for the sake of it. We will fight relentlessly so you can get back to business as soon as possible.  

Hear it from our satisfied clients

Expert litigators, ready to fight for you.

Spencer Wright

Litigation Director

Spencer leads the strategic operations at Gibbs Wright, with a wealth of knowledge on Queensland law and business operations.

Jessica Carroll

Litigation Solicitor

Jessica holds interests in defamation, corporate and contract law, and works closely with all team members of the firm to ensure the client receives the best result.

Emma Bettridge

Special Counsel

Emma is an experienced commercial litigator committed to giving her clients practical and solutions-oriented advice.

Melany Dowse

Special Counsel

Melany represents a range of clients from individuals and small businesses to body corporates and insolvency practitioners.

Mitchell Caldwell

Senior Litigation Solicitor

Mitchell has degrees in both law and aviation management and has an extensive background in customer service.

Jannah Riley

Litigation Solicitor

Jannah is the newest member of the team with keen eye for litigation and a passion for client success.

Kathryn

Manager

Frequently Asked Questions

  • What is a director?

    A director is the person responsible for managing the company. Larger companies have multiple directors working as a collective, referred to as the board of directors.

    A director must always act in the best interests of the company. At times this can include considering the interests of other parties, such as individual members, creditors, employees and wholly owned subsidiaries.

  • What are the responsibilities of a director?

    The Corporations Act 2001 (Cth) (the Act) imposes four main duties on a director:

    • To exercise care and diligence. The standard is that expected of a reasonable person in the director’s position.
    • To act in good faith and for a proper purpose. This involves avoiding conflicts of interest, and disclosing and managing conflicts of interest if they arise.
    • Not to improperly use their position. A director must not use their position to advantage themselves or others or to cause detriment to the company.
    • Not to improperly use information. A director must not use the information they learn in their role to gain an advantage for themselves or others or to cause detriment to the company.

     

    Other significant duties and responsibilities include:

    • ensuring the company does not trade while insolvent;
    • ensuring the company takes reasonable steps to comply with laws for financial
    • record-keeping and reporting;
    • disclosing any personal interest in company affairs;
    • supplying information to the Australian Securities and Investments Commission (ASIC); and
    • continually disclosing information to the market that is not generally available.

     

    There are also director responsibilities listed in legislation that govern areas such as trade practices, workplace health and safety, taxation, financial services, and the environment.

  • What are the consequences of breaching director duties?

    If a director breaches a duty or fails to meet an obligation, they can be subject to criminal and civil sanctions.

    They can be taken to court by a range of parties including the company itself, shareholders, regulators and creditors.

    There can be severe penalties if a director fails to comply with the Act. For example, a maximum penalty of 15 years imprisonment applies if a director:

    • is reckless or dishonest, and fails to exercise their powers and discharge their duties in good faith or for a proper purpose;
    • uses their position, or information gained in their position, dishonestly:
    • to gain an advantage directly or indirectly for themselves or others; or
    • to cause detriment to the company.

    ASIC and the courts can disqualify a director for failure to comply with the Act, and shareholders or creditors can take civil action. A director can be held personally liable for any company losses that result from their breach of duty.

    A breach of duty can also damage reputations and cause serious financial repercussions, including greater scrutiny by investors and regulators.

    If you have been accused of breaching your duties as a director, you should seek legal advice immediately to protect your rights and limit your liability. Call Gibbs Wright today for a free and confidential initial consultation.

  • How are director disputes resolved?

    Whether you’re a director, shareholder or third party involved in a dispute with a director, there are several ways to resolve it:

    Negotiation and mediation

    The parties should first attempt to resolve the dispute within the company. A meeting could be called to lay out all the issues and desired outcomes. Gibbs Wright can help parties work through their grievances and reach a compromise or resolution.

    Shareholders’ agreement

    A shareholders’ agreement can contain procedures for dealing with a director dispute. It can include, for example, penalties for breaches of directors’ duties. Penalties can include that a director resign for certain breaches, such as creating a rival business, or engaging in criminal conduct such as fraud or theft from the company.

    Resign or sell

    A director can consider resigning from the role if the dispute cannot be resolved easily. If the director is also a shareholder, they could also sell their share. Alternatively, the director could consider buying out other shareholders and remaining in the company.

    Voluntary administration

    When a dispute between directors and shareholders is intractable and causes significant damage to the company, it may be necessary to place the company into voluntary administration. The decision will be based on the financial strength of the company and shareholder attitude.

    Court

    If all other resolution attempts have failed, a court proceedings may be an option. The type of court action will depend on the nature of the dispute and the remedies sought.

    If you are involved in a director dispute, acting quickly can help lessen the impact the dispute can have on you and the company. Seek legal advice from the experienced team at Gibbs Wright.

  • What is an alternate director?

    An “alternate director” is appointed when a director knows they will be absent for one or more board meetings due to, for example, illness, holiday or jury duty.

    This substitute director has the same powers, duties and responsibilities as a director and can be appointed for a set period or until the director can return to duties. The Corporations Act 2001 (Cth) governs the appointment of alternate directors and the Australian Securities and Investments Commission enforces those laws.

  • How can a director be removed?

    A director can be removed if they have committed a serious breach of their duties, or for other reasons such as poor performance or personal conflicts.

    If a company has a constitution or shareholders’ agreement, these documents will set out the procedure for removing a director.

    If there are no such documents, the process outlined in the Corporations Act 2001 (Cth) applies.

  • What are “shadow directors” and “de facto directors”?

    A “shadow director” is a person who has not been officially appointed as a director but on whose instructions or wishes board members are used to acting. A shadow director can face the same penalties as an officially appointed director.

    A “de facto director” is a person who has not been officially appointed a director but who acts as one. It can also refer to a person who has been officially appointed as a director but uses another title or job description in practice.

  • When can a director be held personally liable for company losses?

    A director can be held personally liable for company losses that result from their breach of duty.

    An example is when a company incurs debts while being unable to pay its debts as and when they fall due. In other words, the company is operating while insolvent. If a director allows a company to trade while insolvent, they may be acting illegally and may be subject to criminal and civil penalties.

    A director can also be personally liable if they cause the company to suffer loss. In this situation, they may be acting illegally and may be subject to criminal and civil penalties, such as the payment of compensation.

    A director can also be personally liable for losses incurred because of a breach of other legislation, in areas such as taxation, and workplace health and safety.

    A director’s duties may continue even after the company has stopped trading and been deregistered.

  • Can a director also be a shareholder in a company?

    Yes. A director can choose to hold shares in a company but generally, there is no requirement. However, a company’s constitution can dictate that a director must hold a specific number of shares, either before an appointment or within a certain period after the appointment.

    It is common in smaller companies for a director to also be a shareholder. A small company may have one director who is also the sole shareholder.

  • What is a “shareholder agreement” and why should I have one?

    A shareholders’ agreement is a contract between the shareholders and the company that sets out rules for the structure, ownership, management and direction of the company.

    It may contain information such as:

    • Dispute resolution procedures and penalties for breaching duties;
    • How shareholders can acquire or dispose of shares;
    • How the company is to be funded;
    • The frequency of meetings; and
    • The process for selling or winding up the company.

     

    This type of agreement clarifies the responsibilities and obligations that affect the shareholders in the company. It also signals to potential investors that the company is well-managed and accountable.

Explore your legal options with Gibbs Wright Litigation Lawyers - Brisbane’s Leading Litigation Firm.

Our expert litigators will let you know where you stand and give you legal guidance.