Directors - know your duties and insure your risk!

In brief - Taking steps to mitigate personal liability risk is key

Directors have a myriad of strict duties at law. When these duties are breached — whether innocently, negligently, or deliberately — a director is at risk of being held personally liable. However, there are essentially three ways a director can mitigate that risk.

These are:

1. fully understand and comply with duties
2. maximise the protection that can be afforded to them by the company of which they are a director
3. have and understand the cover provided to them under a directors' and officers' insurance policy

Fully understanding and complying with duties under the Corporations Act

Many director's duties have been codified by the Corporations Act 2001 (Cth) (the Act) which sets out that: