Officers

An officer of a corporation is someone who:

• is involved in making decisions that affect the business of the corporation
• can greatly affect the corporation’s financial standing.

Who officers are

The governing body of the corporation is the board of directors.

Directors are officers with authority over the corporation. They’re responsible for managing it and have extra legal duties.

Other officers of a corporation are:

• CEOs (sometimes called general managers or executive managers)
• secretaries (in large corporations)
• chief financial officers (CFOs)
• special administrators and liquidators—in short, the other people who are involved in making decisions that affect the business of the corporation.

Each director, officer or employee has personal responsibility for their duties and meeting them. 

Legal duties of officers 

Under the CATSI Act, officers have to follow certain legal duties or they could face penalties.

These 5 legal duties protect the corporation and everyone involved with it.

Duty of care and diligence

Officers must use their powers and do their jobs with proper attention and care. Doing this duty means being thorough and careful. Directors must pay close attention to what's going on in the corporation and is ready to make decisions. They know the company's business well, including:

• following the corporation’s rules
• never missing a meeting and always being on time
• reading all the information before meetings
• understanding the corporation’s financial health
• asking lots of questions, especially about complex or unclear topics.

Breaching this duty may result in a fine. 

Duty of good faith

Officers must use their powers and do their jobs honestly and in line with the corporation’s best interest. This means not using their position for personal gain. Decisions should aim to benefit the corporation as a whole.

Officers who don’t follow this duty may be fined or face criminal charges for severe cases. 

Duty to not misuse position or information

Officers must never use their role or information they get from it to:

• benefit themselves or others
• harm the corporation. 

This includes not sharing private information about members or giving an unfair advantage to someone competing for a contract.

Breaching this duty could lead to a fine or criminal charges if done recklessly or with dishonest intent.

Duty to disclose personal interests

Directors must tell each other about any personal interests in the corporation's dealings. This helps to avoid decisions that are a conflict of interest. 
Managing these conflicts is key for acting in the corporation’s best interest.

To handle a conflict, directors should inform the others through one of the following:

• a standing notice 
• call a meeting to discuss the conflict. 

Disclosing a conflict doesn't mean the director can't join the meeting. They might need to step out for that part of the discussion or stay if they have permission from the others.

Not managing conflicts properly could lead to criminal penalties. 

There’s nothing wrong with having a conflict if it's disclosed and managed according to the group's decision.

Duty to not trade while insolvent

Directors must not let the corporation do business if it can't pay its bills on time. Being insolvent means not being able to cover debts when they're due. 
If a director’s action or decision leads the company into insolvency, they've failed in their duty.

Directors must always be aware of the corporation’s financial state to avoid insolvency. Breaching this duty could lead to:

• a fine
• criminal charges in dishonest cases.

Consequences of a breach

When a duty is breached the consequences depend on:

• the nature of the duty 
• the seriousness of the breach. 

Action by the corporation

The corporation can:

• remove or dismiss the person involved in the breach
• take civil action against the person who breached the duty and recover any loss.

Civil penalty proceedings by the Registrar

The Registrar can apply to a court for a ‘declaration of contravention’ when a director doesn’t take care or act with diligence in their duties.

The court’s declaration gives final evidence of the breach. If it’s serious, a court could order the director to pay up to $200,000 to the Commonwealth for each contravention.

A court could also:

•    order the director to pay compensation to the corporation for damage

•    disqualify the director from managing a corporation.

Disqualification

A director can be disqualified from managing a corporation if they:

•    have been convicted of certain serious criminal offences (including fraud)

•    are bankrupt.

We publish names on a register of disqualified officers.

Criminal charges

Some breaches can mean criminal charges, heavy fines and jail time. 

This may happen if a director is found guilty by a court of breaching a duty to the criminal standard.

Native title obligations

The CATSI Act makes sure directors of Native Title corporations are not put in a position where their duties under native title legislation conflict with their duties under the CATSI Act. 

A director may be acting in good faith and believe what they’re doing is necessary to comply with native title legislation. In this case, they won’t be in breach of duties under the CATSI Act or common law.