Corporations Act 2001

A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

were a director or officer of a corporation in the corporation’s circumstances; and

occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

This subsection is a civil penalty provision (see section 1317E).

A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they:

make the judgment in good faith for a proper purpose; and

do not have a material personal interest in the subject matter of the judgment; and

inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and

rationally believe that the judgment is in the best interests of the corporation.

This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence)—it does not operate in relation to duties under any other provision of this Act or under any other laws.

In this section: