Are You Acting Honestly? By Ginette Muller

On 21 March 2024, ASIC Chair Joe Longo told a gathering of Company Directors that being a director was not meant to be easy.  His full speech can be read here but the main point he makes is this:

No matter how big or small an enterprise you are running, directors need to ask the right questions so they can be confident that they are complying with their director’s duties.

The main director duties can be found in sections 180-184 of the Corporations Act – black letter law.  The question is however, How do you apply them in everyday life without having your solicitor on speed dial?  Mr Longo suggests that by answering yes to the following practical questions you can pretty much ensure good corporate governance, which means no unexpected visits from the corporate cop!  So, what are the questions:

1. Are you acting honestly? Are you putting the company first?

2. Do you have a continuous curiosity to understand all aspects of the company’s core business and the risks associated with it?

3. Do you know how your company makes money? What are the key drivers of your profitability and who are your customers; and

4.  Are you challenging management to ensure your understanding is well-founded, and getting trusted professional advice?

It’s not every day that we get some practical advice from the corporate watchdog so good job Mr Longo and thank you for acknowledging what we all already know.  It’s not easy being a director but with some guidance we can get to where we need to be.