Photo credit: Raw Pixel, Unsplash
A director, secretary or employee must not improperly use their position.
So this means that directors cannot use their position to gain an advantage for themselves or others or cause detriment to the corporation.
This is a civil duty in section 182 and a criminal duty per section 184 of the Corporations Act.
Now because of this, if there is a breach, civil or criminal penalties may apply.
Civil penalties may include disqualification, compensation or financial penalties. Financial penalties may be up to $200,000 for individuals.
Importantly, criminal remedies may also apply for the same breach if the conduct was dishonest, intentional or highly reckless.
Next, let's take a look at the criminal penalties.
Criminal penalties may include fines, the lowest being $850. A dishonest breach of good faith may attract a penalty up to $340,000.
Also, market manipulation or insider trading can be fined up to $765,000 or up to 3 times the value of the benefit obtained from the conduct.
In the case of CellOS Software Ltd v Huber  the court found that Mr Huber, a director, improperly used information to gain advantage for himself and others and to cause detriment to the company CellOS.
Below are examples of Mr Huber's alleged improper use of his position:
Orders were not made in this judgment however, CellOS claims:
Do you need help from an Australian business lawyer for startups? Contact us today for help on firstname.lastname@example.org or 1300 478 278 Australia wide or on +61 2 9151 7233 from overseas. We are always glad to help.
Please log in again. The login page will open in a new window. After logging in you can close it and return to this page.