A director dispute can impair a company’s operations, as well as harm its reputation, so any dispute involving directors should be resolved quickly and effectively — and that’s where Gibbs Wright Litigation Lawyers can help.
Disputes involving directors of a company
A director dispute is a disagreement between directors, or between shareholders and directors, of a company. Director disputes are unfortunately common and can arise for a variety of reasons, including:
- personality clashes;
- breach of duties;
- company strategy and management;
- withholding of dividends;
- disparities between profits and dividends;
- failure to provide financial, accounting and statutory information;
- exclusion from meetings and management;
- breach of shareholder agreements; and
- ethical concerns.
What our clients say
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.
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 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 which is not generally available.
There are also director responsibilities listed in legislation that governs areas such as trade practices, workplace health and safety, taxation, financial services, and the environment.
Breach of fiduciary duties
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 personal liability. Call Gibbs Wright today for a free and confidential initial consultation.
Resolving a director dispute
How director disputes can be resolved
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.
How Gibbs Wright can help you
Whether you’re a director of a company involved in a business dispute, or a shareholder involved in a dispute with a company director, Gibbs Wright have the experience and knowledge to help you.
Our aim is to work closely with you to understand your rights and find the most cost effective and successful course of action. We can provide legal advice, negotiation, mediation, and representation for your disputes.
Whether your dispute is one that can be resolved with a simple letter, or if a trial proceeds, Gibbs Wright will fight hard for your rights.
Frequently asked questions
Why choose Gibbs Wright Litigation Lawyers
There are hundreds of law firms in Queensland, but only a handful of them focus solely on litigation, and fewer still have the necessary skill and understanding to deliver commercially viable results for your matter.
At Gibbs Wright, we exclusively practice in litigation and dispute resolution, and as a client of ours, we want you to feel confident that you will receive unparalleled service and dedication for your dispute.
Our firm represents both plaintiffs and defendants across Queensland, in a wide range of litigation and dispute matters, and no case is too small, too large or too complex for our lawyers to take up the fight.
Whether you are an individual or one of Australia’s largest companies, your case deserves the same level of attention and dedication – and that is what we strive to provide to each and every client.
- Commercially viable outcomes
- Dedicated litigation firm
- Outstanding client satisfaction
- High success rate
- Direct contact with your lawyer
- Brisbane-based litigation team
*Complimentary consultations are reserved for disputes over $250,000 and are subject to approval.