With the soon to be enacted Director Penalty Regime to be extended to GST, directors need to take steps to manage the risks of being a director.
Directors face a myriad of potential risks including:
• Breach of directors’ duties
• Insolvent trading
• Director Penalty Notices for unpaid PAYG(W), Superannuation Guarantee Contributions and soon to be enacted GST liabilities
• Personal guarantees being called in
• Breach of duties when acting as a director of a trustee company
• Breach of other laws (workplace health & safety, environmental, competition and consumer etc.)
Asset Protection for Directors
There are a number of steps that can be taken to mitigate these risks, including:
• Directors’ Insurance and Indemnities
• Careful consideration of who is a director of the company (e.g. both husband and wife should not necessarily both be directors
• Consideration of personal assets of directors
• Various strategies to protect personal assets
Directors owe a duty to the company, creditors, employees and shareholders.
It is ultimately the director’s responsibility to act in good faith and be aware of their obligations.
Guidance and advice from a good accountant and lawyer is also important.