Director delegations in Australia

By Vivian Michael | Company

Director delegations in Australia

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At some point, as a director, you may decide to delegate duties to someone else. 

Now, directors are able to delegate duties because of section 198D of the Corporations Act 2001. 

In fact, directors may delegate any of their powers to: 

  • A committee of directors;
  • A director;
  • An employee of the company; or 
  • Any other person.

And they'll need to record those director delegations in the company minute book. 

Section 251A of the Corporations Act has all the details of what should be kept in a company’s minute book, if you'd like to learn more.

So, as a director, can you rely on information or advice from others?

Information or advice from others

Director's may have employees, a professional advisor or expert or another director giving them information and advice about the company.

So, can directors rely on that information or advice?

Now, the good news is that directors can rely on that information. 

And, the courts will assume it was reasonable for a director to rely on that information or advice, unless the contrary is proved. 

The reliance has to have been made in good faith and the director cannot have carelessly accepted it on face value.

Rather, the director must have made an independent assessment of the information or advice using their knowledge of the company, structure and operations: section 189 Corporations Act 2001. 

And the director won’t be responsible for the the actions of the delegate if these above conditions are met. 

So, why does all of this matter?

Well, if as a director, you receive bad information or advice, you'll want to prove that your reliance was reasonable and that you should not be held responsible.

Final thoughts

Finally, be sure to complete your due diligence and delegate your director powers carefully. 

And, always ask questions.

I wish you all the best in your venture! feel free to leave any comments below.


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About the Author

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to make quality business legal services accessible to entrepreneurs launching in Australia that would otherwise DIY, rely on legacy contracts or go without.

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