What happens if a director doesn't act in the best interest of the company?

In Plain English

If a company director doesn't fulfill their duties, they could face serious consequences. These can include criminal charges that could lead to imprisonment or fines, civil penalties where they have to pay the Commonwealth a hefty sum, being forced to compensate the company or others for any losses caused by their actions, and even being banned from managing a company in the future. These obligations continue even after the company is no longer registered.

Detailed Explanation

A director who fails to perform their duties may face several consequences under the Corporations Act 2001:

• Criminal Offences: A director may be guilty of a criminal offence, potentially facing imprisonment for up to 15 years or a fine. The fine is the greater of 4,500 penalty units or three times the benefit derived or detriment avoided because of the offence (as indicated in [Chunk 121]).
• Civil Penalties: A director may contravene a civil penalty provision. The court may order the director to pay the Commonwealth an amount equal to the greater of 5,000 penalty units or three times the benefit derived or detriment avoided because of the contravention (as indicated in [Chunk 121]).
• Personal Liability: A director may be personally liable to compensate the company or others for any loss or damage they suffer (as indicated in [Chunk 121]).
• Prohibition from Managing a Company: A director may be prohibited from managing a company in the future (as indicated in [Chunk 121]).

These obligations may persist even after the company has been deregistered (as indicated in [Chunk 121]).