What duties/responsibilities do I have?
You are personally liable and responsible for all aspects of running the business. This includes paying your debts and ensuring you keep good business records.
Under the Corporations Act 2001, there are a variety of legal obligations and duties imposed on the company and on the directors as individuals.
Some of the most important obligations for directors include the duty to:
- act in good faith
- act in the best interests of the company
- exercise care and diligence
- prevent the company trading while insolvent, (when it is unable to pay its debts)
- report to the liquidator on the affairs of the company if the company is being wound up
- help the liquidator (e.g. by giving the liquidator the company books and records that the director may have in his/her possession).
As a director, you are personally liable for unpaid Pay As You Go (PAYG) withholding and Super Guarantee Charge obligations (SGC). If you are a director (or are about to become a director) of a company, you should find out if there are any unpaid and unreported PAYG withholding or SGC amounts.
If the company has a PAYG or SGC debt, the Commissioner of Taxation may issue you with a director penalty notice (DPN) as a warning. If the company doesn’t take appropriate steps within 21 days to pay the debt, the Commissioner can take action against you personally to recover the debt amount. If you receive a DPN you should immediately seek professional advice.