74. Directors

(1) A Private Company must have at least 1 director and a Public Company must have at least 2 directors.

(2) A Person must not be a Director if the Person:

• (a) is not a natural person; or
• (b) is under 18 years old; or
• (c) is disqualified from being a Director because of:

(i) having been convicted of a criminal offence, involving dishonesty or moral turpitude, in any jurisdiction in the past 10 years; or

(ii) having been found guilty of insider trading or the equivalent in any jurisdiction at any time; or

(iii) having been judged disqualified by any court; or

(iv) having been disqualified by the AFSA; or

(v) a disqualification specified in the Articles of Association; or

• (d) is an undischarged bankrupt.

75. Election, term and removal of directors

(1) The first directors of a Company must be elected by the Incorporators. Subsequent directors must be elected by the Shareholders by Ordinary Resolution, or as otherwise provided by the Articles of Association, for the term that the Shareholders decide.

(2) Each director holds office until the director’s successor takes office or until the director’s earlier death, resignation or removal by Ordinary Resolution or as otherwise provided by the Articles of Association.

(3) A vacancy created by the death, resignation or removal of a director may be filled by Ordinary Resolution or, if the vacancy is not filled by an Ordinary Resolution, by the remaining directors. However:

• (a) any director appointed by the remaining directors is subject to reappointment by Ordinary Resolution at the next General Meeting; and
• (b) if an Ordinary Resolution of reappointment of the director is not passed at the next General Meeting—the director ceases to be a director at the conclusion of the General Meeting.

(4) The number of directors must be fixed by the Articles of Association subject to the requirements of section 74(1) (Directors).

(5) If, at a General Meeting, it is proposed that 2 or more persons be appointed as directors, the appointments must be made by a separate Resolution in respect of each person, unless unanimously agreed otherwise by the Shareholders at the meeting.

76. Duties of Directors

(1) The duties of Directors under sections 77 to 83 and section 85 are owed by each Director of a Company to the Company.

(2) If a person ceases to be a Director, the person continues to be subject to:

• (a) the duty under section 81 (Duty to avoid conflicts of interest), in relation to the exploitation of any property, information or opportunity of which the person became aware when the person was a Director; and
• (b) the duty under section 82 (Duty not to accept benefits from third parties), in relation to things done or omitted to be done by the person before the person ceased to be a Director.

(3) Except as otherwise provided in these Regulations, more than 1 of the duties of Directors may apply in any given case.

(4) The Constitutional Documents of a Company must not include any provision the effect of which would be to weaken the duties of Directors under this Chapter.

77. Duty to act within powers

A Director of a Company must:

• (a) act in accordance with the Constitutional Documents; and
• (b) only exercise the powers of a Director for the purposes for which the powers have been given.

78. Duty to promote success of Company

(1) A Director of a Company must act in the way the Director honestly considers, in good faith, would be most likely to promote the success of the Company for the benefit of its Shareholders as a whole and, in doing so, must have regard, among other matters, to:

• (a) the likely consequences of any decision in the long term; and
• (b) the interests of the Company’s Employees; and
• (c) the need to foster the Company’s business relationships with suppliers, customers and others; and
• (d) the impact of the Company’s operations on the community and the environment; and
• (e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
• (f) the need to act fairly as between Shareholders of the Company.

(2) To the extent that the purposes of the Company consist of or include purposes other than the benefit of its Shareholders, the reference in subsection (1) to the benefit of its Shareholders has effect as if it included those other purposes.

(3) The duty imposed under this section has effect subject to any law applicable to the Company requiring Directors, in certain circumstances, to consider or act in the interests of the Company’s Creditors or customers.

79. Duty to exercise independent judgement

(1) A Director of a Company must exercise independent judgement.

(2) A Director of a Company does not infringe the duty under subsection (1) if the Director acts:

• (a) in accordance with an agreement duly entered into by the Company that restricts the future exercise of discretion by its Directors; or
• (b) in a way authorised by the Constitutional Documents.

80. Duty to exercise reasonable care, skill and diligence

A Director of a Company must exercise the care, skill and diligence that would be exercised by a reasonably diligent person with:

• (a) the general knowledge, skill and experience that may reasonably be expected of a person Exercising the Functions Exercised by the Director in relation to the Company; and
• (b) the general knowledge, skill and experience that the Director has.

81. Duty to avoid conflicts of interest

(1) A Director of a Company must avoid a situation in which the Director has, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company.

(2) The duty under subsection (1) applies in particular to the exploitation of any property, information or opportunity.

(3) The duty under subsection (1) does not apply to a conflict of interest arising in relation to a transaction or arrangement if the requirements of section 83 (Duty to declare interest in proposed transaction or arrangement) or 85 (Duty to declare interest in existing transaction or arrangement) are met.

(4) A Director of a Company does not Contravene the duty under subsection (1) if:

• (a) the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
• (b) the Directors of the Company have authorised the situation in accordance with the Articles of Association and any applicable provisions of these Regulations and the Rules.

(5) A Company’s Articles of Association may include alternative procedures for avoiding conflicts of interests. A Director does not Contravene the provisions of this section by acting in accordance with the alternative procedures.

(6) In this section: conflict of interest includes a conflict of an interest and a duty and a conflict of duties.

82. Duty not to accept benefits from third parties

(1) A Director of a Company must not accept a benefit from a third party if the benefit is given to the Director:

• (a) because of the Director’s position as a Director of the Company; or
• (b) for doing (or not doing) anything as a Director of the Company; unless the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

(2) In this section: conflict of interest includes a conflict of an interest and a duty and a conflict of duties.

83. Duty to declare interest in proposed transaction or arrangement

(1) This section applies if a Director of a Company becomes aware, or ought reasonably to have become aware, that the Director is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the Company.

(2) The Director must declare the nature and extent of the interest to the other Directors of the Company in accordance with section 85 (Duty to declare interest in existing transaction or arrangement).

(3) But the declaration must be made before the proposed transaction or arrangement is entered into. For a declaration under this section, section 85 (Duty to declare interest in existing transaction or arrangement) applies to the Director with any other necessary changes.

84. Breaches of Directors’ duties

If a Director of a Company Breaches any 1 or more of the duties under sections 77 to 83, the Director is taken to have Contravened these Regulations.

85. Duty of Directors to declare interest in existing transaction or arrangement

(1) If a Director of a Company has, directly or indirectly, an interest in a transaction or arrangement entered into by the Company or a Subsidiary of the Company and the Director is aware that the interest conflicts or may conflict, to a material extent, with the interests of the Company or Subsidiary, the Director must unless the Director has previously declared such interest under section 83 (Duty to declare interest in proposed transaction or arrangement), declare to the other Directors of the Company the nature and extent of the Director’s interest in accordance with this section.

(2) The declaration must be made as soon as practicable after the Director becomes aware of the circumstances that gave rise to the duty to make the declaration.

(3) The declaration must be made:

• (a) at a meeting of the Directors; or
• (b) by a general Written notice given to the other Directors.

(4) A declaration made at a meeting of the Directors under subsection (3)(a) must be tabled at, and recorded in the minutes of, the meeting.

(5) A declaration made by way of a general Written notice given to the other Directors under subsection (3)(b) must be tabled at, and recorded in the minutes of, the first meeting of the Directors after the declaration is made or, if it is not reasonably practicable to do so at that meeting, at the next earliest meeting of the Directors.

(6) A notice given to the Company by a Director that the Director is to be regarded as interested in a transaction or arrangement with a specified Person is sufficient declaration of the Director’s interest in any transaction or arrangement entered into with the Person after the notice is given.

(7) If a declaration of interest for section 83 or this section proves to be, or becomes, inaccurate or incomplete, a further declaration must be made, in the same way as the initial declaration.

(8) If a Director of a Company Fails to declare an interest of under this section or section 83, the Company, a Shareholder of the Company or the Registrar may apply to the Court for an order under this subsection. On the application, the Court may make any order that it considers appropriate, including, for example, either or both of the following:

• (a) an order setting aside the relevant transaction or arrangement;
• (b) an order directing the Director to account to the Company for any benefit, gain or profit obtained because of the relevant transaction or arrangement.

(9) However, a transaction or arrangement is not voidable, and a Director is not accountable, under subsection (8) in relation to it if, despite a Failure to comply with this section:

• (a) the transaction or arrangement is ratified by the Company under section 86 (Ratification on interest in existing transaction or arrangement) at a General Meeting; and
• (b) the nature and extent of the Director’s interest in the transaction or arrangement were declared in reasonable detail in the notice calling the General Meeting.

(10) Also, without limiting the Court’s power to order a Director to account for any profit, gain or benefit realised, the Court must not set aside a transaction or arrangement unless it is satisfied that:

• (a) the interests of third parties who have acted in good faith would be unfairly prejudiced if the transaction or arrangement were not set aside; or
• (b) the transaction or arrangement was not reasonable and fair in the interests of the Company at the time it was made.

86. Ratification of interest in existing transaction or arrangement

(1) This section applies to the ratification by a Company of a transaction or arrangement mentioned in section 85(1) (Duty to declare interest in existing transaction or arrangement).

(2) The Company may, by an Ordinary Resolution, ratify the transaction or arrangement, unless its Constitutional Documents prohibit from doing so.

(3) If the Company is a Public Company, any votes cast by the Director or Directors who have the conflict of interest in the transaction or arrangement, and any other Connected Person to such a Director, must be disregarded for the purposes of any Ordinary Resolution mentioned in subsection (2).

(4) In this section:

Connected Person, in relation to a Director, means:

• (a) the spouse, or a child, stepchild or a grand-child, of the Director; or
• (b) a Body Corporate if the Director, alone or together with an individual or individuals mentioned in paragraph (a):

(i) has at least 20% of any share capital of the Body Corporate; or

(ii) is entitled to exercise or control the exercise of more than 20% of the voting power at any general meeting of the Body Corporate; or

• (c) if the Director, or an individual mentioned in paragraph (a), is a partner in a partnership—each partner in the partnership; or
• (d) any other Person declared by the Rules to be a Connected Person for this definition.

87. Prohibition of financial assistance to Directors etc.

(1) Subject to subsection (4), a Company must not provide financial assistance of any of the following kinds to a Director:

• (a) making a loan, issuing a Debt Security or granting a credit facility or other similar form of financial assistance;
• (b) giving a guarantee or security or indemnity in connection with a loan, Debt Security, credit facility or other similar form of financial assistance, whether the financial assistance is provided by the Company or another Person;
• (c) any other form of financial assistance prescribed by the Rules,

unless:

• (d) consent is given by Shareholders attending (in person or by proxy) a General Meeting who together hold not less than 90% of the Shares that are voted at the meeting; and
• (e) all of the Directors of the Company certify that providing the financial assistance would not materially prejudice either of the following:

(i) the interests of the Company and its Shareholders; or

(ii) the Company’s ability to discharge its Liabilities as they fall due.

(2) Any financial assistance provided under subsection (1) must be:

• (a) documented in Writing; and
• (b) before it is provided, recorded in the minutes of a meeting of the Directors of the Company, under signature of all of the Directors, as being provided in accordance with the requirements of that subsection.

(3) Financial assistance may not be provided to a Connected Person for a Director of a Company except in accordance with this section.

(4) Subsection (1) does not apply to the provision of financial assistance by a Company if:

• (a) the financial assistance consists of remuneration paid in the ordinary course to a Director for services as a Director; or
• (b) the financial assistance is for liability indemnity insurance related to the discharge of a Director’s duties to the Company; or
• (c) the Company’s ordinary business includes providing finance and the financial assistance is provided in the ordinary course of that business and on ordinary commercial terms; or
• (d) the financial is of a kind prescribed by the Rules as exempt from this section.

(5) Sections 81 (Duty to avoid conflicts of interest) and 82 (Duty not to accept benefits from third parties) do not apply to any financial assistance provided in accordance with this section.

88. Validity of acts of Director

The acts of a Director are valid despite any defect that may afterwards be found in the Director’s appointment or qualification.

89. Secretary

(1) A Public Company must have at least 1 Secretary.

(2) The Directors of a Public Company must take all reasonable steps to ensure that the Secretary (or each joint Secretary) of the Company is a Person who appears to them to have the necessary knowledge and experience to discharge the Functions of Secretary of the Company and who:

• (a) has held the office of Secretary of a public Body Corporate for at least 3 of the immediately preceding 5 years; or
• (b) is a Person who, because of holding or having held any other position or by being a Shareholder of any other body, appears to the Directors to be capable of discharging the Functions of Secretary of the Company.

(3) A Private Company may have a Secretary.

(4) If a Private Company does not have a Secretary:

• (a) anything authorised or required to be given or sent to, or served on, the Company by being given or sent to, or served on, its Secretary may be given or sent to, or served on, the Company itself and anything addressed to the Secretary is taken to be addressed to the Company; and
• (b) anything else required or authorised to be done by the Secretary may be done by a Director or a Person authorised generally or specifically in that behalf by the Directors.

90. Register of Directors and Secretaries

(1) Every Company must keep, at its registered office, a Register of its Directors and, if applicable, a Register of its Secretaries. The Company must ensure that a register contains the particulars required by the Rules. An election may be made in relation to a Private Company for the information, which otherwise would require to be kept in the Register of Directors and Secretaries, to be kept by the Registrar.

(2) If a Company keeps a register at its registered office, the Company must ensure that the register is open to inspection, during business hours and without charge, by the Registrar or any Shareholder or Director of the Company.

(3) The Company may, by its Articles of Association or a decision in General Meeting, impose reasonable restrictions on the availability of a register for inspection under subsection (2), but must nevertheless ensure that the register is open to inspection for at least 2 hours on each day that its registered office is open.

(4) If a Company Fails to make a register available for inspection under subsection (2) by the Registrar or a Shareholder or Director of the Company, the Registrar may, by Written notice given to the Company, direct the Company to immediately make the register available for inspection by that Person. The Company must comply with the direction.

(5) Contravention of subsections (1) to (4) is punishable by a fine.

(6) A Private Company may make an election to keep information in the Register kept by the Registrar.

(7) An election may be made under this section by:

• (a) the applicant wishing to incorporate a Private Company under these Regulations; or
• (b) the Private Company itself once it is incorporated.

(8) In paragraph (b) of subsection (7), the election is of no effect, without prior agreement of all the Shareholders of the Private Company at the particular time to the making of the election.

(9) An election under this section is made by giving notice of election to the Registrar.

(10) If the notice is given by Person(s) wishing to incorporate a Private Company:

• (a) it must be given together with the application for the incorporation under section 13; and
• (b) it must be accompanied by a statement containing all the information prescribed by the Rules.

(11) If the notice is given by the Private Company, it must be accompanied by:

• (a) a statement by the Private Company that all the Shareholders of the Private Company have assented to the making of the election; and
• (b) a statement containing all the information prescribed by the Rules to be contained in the Private Company's Register of Directors and Secretaries as at the date of the notice in respect of matters that are current as at that date.

(12) An election made under subsection (6) takes effect when the notice of election is registered by the Registrar.

(13) The election remains in force until either:

• (a) the Private Company ceases to be a Private Company; or
• (b) a notice of withdrawal sent by the Private Company under subsection (17) is registered by the Registrar, whichever occurs first.

(14) While an election under subsection (6) is in force, a Private Company must continue to keep a Register of Directors and Secretaries in accordance with the Rules, containing all the information that was required to be stated in that Register as at the time immediately before the election took effect, but the Private Company does not have to update that Register to reflect any changes that occur after that time.

(15) The date to be recorded in the Register kept by the Registrar is to be the date on which the document containing that information is registered by the Registrar.

(16) During the period when an election under subsection (6) is in force, a Private Company must deliver to the Registrar any information in accordance with the Rules, which the Private Company would, in the absence of any such election, have been obliged under these Regulations to enter in its Register of Directors and Secretaries and it must do so as soon as reasonably practicable after any relevant change but in any event within a period of 14 days.

(17) A Private Company may by giving notice of withdrawal to the Registrar withdraw an election made by or in respect of it under subsection (6), where:

• (a) the withdrawal takes effect when the notice is registered by the Registrar;
• (b) the effect of withdrawal is that the Private Company's obligation under subsection (1) to keep a Register of Directors and Secretaries applies from then on with respect to the period going forward;
• (c) the Private Company must place a note in its Register of Directors or Secretaries—

(i) stating that the election under subsection (6) has been withdrawn;

(ii) recording when that withdrawal took effect; and

(iii) indicating that information about its Directors or Secretaries relating to the period when the election was in force that is no longer current is available for public inspection on the Register kept by the Registrar.

(18) All notices and information to be delivered to the Registrar under this section must be made in Writing.

(19) Contravention of subsections (6) to (18) is punishable by a fine.

91. Assumptions in relation to Directors and Secretary

(1) A Person dealing with a Company is entitled to assume that anyone who appears, from the information that is available to the public in the Register, or a register kept by the Company under these Regulations, to be a Director or Secretary of the Company:

• (a) has been duly appointed; and
• (b) has authority to Exercise the Functions customarily Exercised by a Director or Secretary of a similar Company.

(2) A Company is not entitled to assert in proceedings in relation to dealings of the Company that any assumption under subsection (1) is incorrect.

(3) However, a Person is not entitled to make an assumption under subsection (1) if at the time of the dealing with the Company the Person knew or could have reasonably suspected that the assumption was incorrect.

92. Disqualification orders

(1) Without limiting any other powers available to the Registrar, if the Registrar considers that it is in the public interest that an individual should not, without the leave of the Court, be a Director of, or in any way (whether directly or indirectly) be concerned or take part in the management of, a Company, the Registrar may apply to the Court for an order to that effect against the Person.

(2) The Court may make the order applied for if satisfied that the Person’s conduct (including, for example, any Breach by the person of any 1 or more of the duties under sections 77 to 83 and section 85) makes the person unfit to be concerned or take part in the management of a Company.

(3) An order under subsection (2) may be made:

1. (a) in the case of a first offence, for the period, not longer than 15 years; or
2. (b) in the case of a repeated offence, for an unlimited period, as the Court considers appropriate.

(4) A Person must not Contravene an order under subsection (2).

(5) Contravention of subsection (4) is punishable by a fine.