Directors' Duties: Conflicts, Proactive Disclosure and S 181 of the Corporations Act

Abstract

Australian company directors are subject to duties of disclosure arising from a number of sources. In particular disclosure has been required of directors under general law and statutory duties in the context of conflicts of interest and in presenting proposals to shareholders for approval. A recent decision has, however, rejected a requirement of ‘proactive disclosure’ in the context of conflicts of interest. This contrasts with the position in the United Kingdom, where active disclosure is required of directors as part of their fiduciary and statutory duties to act in good faith in the interests of the company. This article examines the appropriateness of a requirement of disclosure as part of the duty to act in good faith in the interests of the company.

Keywords: directors' duties, fiduciary duties, good faith, disclosure, Duncan v Independent Commission Against Corruption, s 181 Corporations Act

JEL Classification: K22