Sections 180 to 184 of the Corporations Act: what each one requires, which are civil and which are criminal, and the one defence that covers only one of them.
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The Corporations Act 2001 sets out core duties for every director and officer of an Australian company, in sections 180 to 184. ASIC states that these obligations apply to all directors, including directors of small companies. It also states that a sole director who is the only shareholder still owes them, because the company is a separate legal entity with its own interests.
Most founders meet these sections for the first time in due diligence, or when a dispute starts. This guide sets out what each section requires, how the civil and criminal consequences differ, and what the business judgment rule does and does not cover.
This is general information, not advice. CatenaHQ is software. Nothing on this page is legal, financial, tax or investment advice, and it does not take account of your circumstances. Speak to a lawyer, accountant or other qualified adviser about your own position.
Sections 180 to 183 are civil obligations. Section 184 contains the criminal offences. The headings in the Act say so: section 180 is headed “Care and diligence—civil obligation only”, and section 184 is headed “Good faith, use of position and use of information—criminal offences”.
A director or officer must exercise their powers and discharge their duties with the care and diligence that a reasonable person in the same circumstances would exercise. That is ASIC’s summary of the duty. Section 180(1) is a civil penalty provision, and the section carries no criminal offence.
A director or other officer must exercise their powers and discharge their duties in good faith and for a proper purpose. Section 181(1) is a civil penalty provision.
A director, secretary, other officer or employee must not improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the corporation. A person involved in a contravention also contravenes the section (s182(2)). Both subsections are civil penalty provisions.
A person who obtains information because they are, or were, a director, officer or employee must not improperly use it to gain an advantage for themselves or someone else, or to cause detriment to the corporation. It applies to former directors as well.
It is an offence for a director or other officer to fail to act in good faith or for a proper purpose in the circumstances described in s184(1), and an offence for a director, officer or employee to use a position (s184(2)) or information (s184(3)) dishonestly. Subsections (2) and (3) can be made out by intentional dishonest use or by recklessness as to the result.
Civil. For an individual, the maximum civil penalty is the greater of 5,000 penalty units or, where the benefit derived or detriment avoided can be determined, three times that amount (section 1317G). ASIC gives the value of a penalty unit as $364 for offences committed on or after 1 July 2026, and states 5,000 penalty units as $1.82 million.
Criminal. The Parliamentary Library’s guide to directors’ duties gives the maximum penalty for a criminal offence under section 184 as 15 years’ imprisonment. ASIC’s penalties page says the maximum prison penalties for the most serious offences, which include breaches of directors’ duties, are 15 years. We could not read the penalty line in the text of section 184 itself, so confirm the current figure on the Act before you rely on it.
Section 180(2) is the business judgment rule. It sets four conditions, all of which concern the judgment the director made:
A “business judgment” is any decision to take or not take action on a matter relevant to the business operations of the corporation (s180(3)). The Act states that the subsection only operates in relation to duties under section 180. It does not operate in relation to any other provision of the Act or to other laws, which means it is not an answer to a claim under sections 181 to 184.
ASIC’s officeholder guidance says most directors of small proprietary companies have hands-on responsibilities. A small team does not reduce the duties.
ASIC states that a director cannot delegate responsibility for understanding the company’s affairs, and remains responsible for their final decisions.
ASIC notes that directors have a legal obligation to prevent insolvent trading (section 588G), and that the safe harbour only applies if the director continues to meet their core duties.
The third condition of the business judgment rule turns on whether the director informed themselves about the subject matter. A board record that shows what information was in front of the board, and what it decided, is the practical way to show that. This is a practical point and not a requirement of the Act.
CatenaHQ’s governance module keeps the directors register, board packs, minutes, directors’ resolutions (s248A) and members’ resolutions (s249A) in one place, so the record exists when it is needed. It records decisions. It does not make a decision a good one, and it does not tell you whether a director has complied with the Act.
Every statement above comes from the pages below, read on 22 October 2026. Check the live pages before you act on a figure.
Yes. ASIC states that the obligations apply to all directors, including directors of small companies. Even a sole director who is also the only shareholder owes the duties, because the company is a separate legal entity with its own interests.
Sections 180 to 183 are civil obligations. Section 180 is the duty of care and diligence, and its heading marks it as a civil obligation only. Section 184 contains criminal offences relating to good faith and proper purpose, use of position and use of information.
Section 180(2) sets four conditions for a director's business judgment: it is made in good faith for a proper purpose, the director has no material personal interest in the subject matter, they inform themselves to the extent they reasonably believe appropriate, and they rationally believe it is in the best interests of the corporation. The Act states that it operates only in relation to duties under section 180, not other provisions.
For an individual, the maximum civil penalty is the greater of 5,000 penalty units or three times the benefit derived or detriment avoided, where that can be determined. ASIC gives the penalty unit as $364 from 1 July 2026. The Parliamentary Library and ASIC both put the maximum imprisonment for the criminal offences at 15 years.
ASIC states that a director cannot delegate responsibility for understanding the company's affairs and remains responsible for their final decisions.
The duties above sit alongside the company records a director is also responsible for keeping straight. These two guides cover the share side.
What the Act requires in a register of members, and the 28-day notification to ASIC.
How a company notifies ASIC of share issues, transfers and other changes to its details.