With the soon to be enacted Director Penalty Regime to be extended to GST, directors need to take steps to manage the risks of being a director.

Directors face a myriad of potential risks including:

Breach of directors’ duties
Insolvent trading
Director Penalty Notices for unpaid PAYG(W), Superannuation Guarantee Contributions and soon to be enacted GST liabilities
Personal guarantees being called in
Breach of duties when acting as a director of a trustee company
Breach of other laws (workplace health & safety, environmental, competition and consumer etc.)

Asset Protection for Directors

There are a number of steps that can be taken to mitigate these risks, including:

Directors’ Insurance and Indemnities
Careful consideration of who is a director of the company (e.g. both husband and wife should not necessarily both be directors
Consideration of personal assets of directors
Various strategies to protect personal assets

Other Obligations

Directors owe a duty to the company, creditors, employees and shareholders.

It is ultimately the director’s responsibility to act in good faith and be aware of their obligations.

Guidance and advice from a good accountant and lawyer is also important.