Corporate Governance, Directors' Duties and Compliance

Clarity about your responsibilities and confidence in the decisions you make.

Most private companies have a constitution or the default rules, a handful of resolutions signed years ago, and a general understanding of who can approve what. That is enough until a bank asks who authorised the guarantee, a shareholder challenges a decision, or a buyer’s lawyer asks for the minute book and gets a shoebox.

Governance is what answers those questions. We help privately owned and closely held businesses set out how decisions get made, who has authority to make them and how conflicts are handled, and we keep the paperwork in line with what is actually happening as the business grows.

Support for your business

Constitutions and governance frameworks

A company runs on either the replaceable rules in the Corporations Act or a constitution adopted when it was set up. Neither is usually revisited when the business takes on an investor, brings in a second owner or starts running several entities. By then the rules on directors’ powers, share transfers and decision-making can be out of step with how the business works.

We review constitutions against how the business operates and amend or replace them where needed. We also check them against any shareholders’ agreement, because the two documents often say different things on the same point, and it is better to find that out now than in a dispute. Where a business needs more structure, we prepare board charters and reserved-matters schedules that say which decisions need board or owner approval and which don’t.

Delegations and approvals

Someone has to be able to sign the contract, approve the spend and authorise the borrowing without calling a board meeting every time. Someone else has to be able to say no. Delegations of authority and approval matrices set out who can approve what, up to what limit and with whose sign-off above it.

They also answer a question that counterparties ask more often than owners expect. Lenders, landlords and customers want to know that the person signing has authority to bind the company. A clear delegation, backed by proper resolutions, makes that a short conversation. We prepare these in a form the business can follow, not a policy that nobody reads.

Resolutions, minutes and transaction approvals

Resolutions and minutes are the record that a decision was made properly, by the right people, at the right time. The Corporations Act requires companies to keep minutes of directors’ and members’ meetings and of resolutions, and they are the first thing a lender, a buyer or a court will want to see.

We prepare and review board and shareholder resolutions and the approvals for transactions such as share issues, borrowing, guarantees, property acquisitions and business sales. The common problem is approval paperwork that arrives after the decision has already been acted on. We would rather get the approval in place first. Where it hasn’t been, we advise on how to put the record right properly.

Directors' duties and conflicts

Directors owe duties under the Corporations Act to act with care and diligence, to act in good faith and for a proper purpose, and not to misuse their position or the company’s information. In a closely held business the directors are often also the owners, the employees and sometimes the landlord, so these duties come up in everyday decisions, not only in disputes.

A director with a material personal interest in a matter generally has to tell the other directors, and what happens next depends on the Corporations Act and the company’s constitution. We advise directors on what their duties mean in practice and set up processes so conflicts are disclosed, recorded and dealt with before the decision is made. Dealings between the company and its directors, their families or their other businesses should be documented on terms that can be defended later, and we prepare them that way.

The duties get sharper when a business is under financial pressure, which is when directors most need advice and least often ask for it.

Keeping the company's records right

Much of company compliance is housekeeping, and the cost of neglecting it is out of proportion to the effort. ASIC has to be told within 28 days when a director or secretary is appointed or leaves, and a new director needs a director ID before they are appointed. If a company is late telling ASIC that a director has gone, ASIC records the lodgement date as the end date. That can leave a departed director looking like a current one on the public register.

The same applies inside the company. The register of members needs to match who actually owns what, and officeholder records need to match who is actually running the business. We help keep the registers, officeholder records and approvals consistent with what has happened, and fix them where they have drifted.

Governance reviews

Some events should trigger a review: growth, new investment, a change in ownership, a succession plan, or a lender or buyer starting to ask questions. A governance review looks at the constitution, registers, resolutions, officeholders and authorities together and produces a short list of what needs fixing, in order of priority. It is also one of the cheapest things a seller can do before going to market, because a buyer’s due diligence will find every gap.

For businesses that run several related entities or project vehicles, the review also covers who is a director of what, which entity has authority to sign, and whether dealings between the entities are properly documented.