Noble Law Expertise in Companies and Trusts

Obligations of a Director

A company is a separate legal entity to yourself and must be treated as such at all times. Under the Corporations Law, Company Directors must : • exercise care and diligence in the management of the company;• act in good faith and in the best interests of the company;• avoid any conflicts of interests between themselves and the company;• not improperly use information or their position;• properly manage the finances of the company and ensure that the company does not trade while it’s unable to pay its debts; and• assist in the winding up of the company. The consequences of failure to comply with these duties and obligations can be severe. Complicity in taxation offences If a company commits a taxation offence, the directors involved in the management of the company are deemed to have committed the same offence. It is a defence if a director did not aid, abet, counsel or procure, and was not knowingly concerned in, or a party to, the commission of the offence.

In dispute with a co-director or shareholder ?

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Generally, the debts of the company will remain with the company. That said, a director may be personally responsible for the company’s debts (including ATO debts) when:• a director breaches their duties and causes the company losses;• the company becomes insolvent;• a director acts as a guarantor; and• the director registers a new company to take over the previously insolvent business (known as illegal phoenix activity).

COMPANY DISPUTES BETWEEN DIRECTORS

What are your options?
If you find yourself in such a situation it's important you understand your rights and options and how you can best resolve the dispute. Your options to resolve a director or shareholder dispute are: Resign and sell; Buy out the other party; Negotiate a resolution; Voluntary Administration; Fight it out in Court.

Make an informed decision. Call us for a free consultation.

Corporate Trusts

It is common practice today for assets (including small businesses) to be held in a corporate trust Pty Ltd company for the benefit of the beneficiaries for asset protection purposes. In such situations, the trustee company owns the assets on trust for the beneficiaries. The directors of the trustee company are the 'brains' of the trustee company and make decisions for it. If the family business is being held in a trust with only one partner being the director and shareholder, the other family member(s) will have no say over those assets. In cases of litigation by or against corporate entities with trusts involved, it is imperative to have good legal advice from the beginning. Legal advice should be sought BEFORE you set up the trust. If the directors or unitholders of the trust are in dispute, it is imperative to get legal advice early. Noble Law understands corporate and trust structures having successfully advised clients in settling such disputes.
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