There are significant legal and regulatory requirements imposed on companies in Australia. In many instances the ultimate responsibility for compliance with those requirements rests with a company's officeholders. It is essential that company directors and other officeholders understand their obligations and the personal liability that can arise where those obligations are not met.
Common mistakes made by SME company directors
- Unnecessarily exposing personal and family assets.
Not understanding the concept of limited liability, and in doing so weakening the protections provided to them by using a company structure in the first place.A prime example of this is where directors or shareholders sign personal guarantees to secure the obligations of their companies.
- Not understanding the different roles they play within the company.
Such as being and employee [someone paid to fulfil a specific task within the company's business and is answerable to the directors], being a director [a person responsible for the day-to-day management of the affairs of the company and answerable to the shareholders] and being a shareholder [owner].
- Not acting in the company's best interests.
Directors are required to act in the best interests of the company when making decisions, rather than themselves."
- Not being fully aware of the extent of their personal liability.
"For example, directors can be held personally liable for breaches of duties as a director and under legislation relating to taxes, superannuation, Fair Work entitlements, workplace health and safety and environmental laws and trading whilst insolvent.
Careful consideration also needs to be given to the internal rules of a company. Disputes can and often do arise over issues such as the appointment and removal of directors and changes in the shareholding of a company. Without a clear agreement between shareholders these disputes can snowball into costly and time consuming court action.
Whether you are starting up a new company, running an established company or are involved in a company dispute, we can help you to understand the rights and obligations involved in operating a company.
We can help with:
- Sale of Shares;
- Directors Duties;
- Shareholder rights;
- Disputes and Litigation;
- Creditors Statutory Demands;
- Winding Up Orders;
- Administration and/or Liquidation