When a Director Abuses Their Power: Your Legal Options to Protect the Company

Disputes between company directors rarely begin loudly. They usually start quietly — in withheld information, unilateral decisions, unexplained payments, or a shift in tone in meetings.

Most founders don’t expect someone they trust to misuse their position. But when a director begins acting in their own interests instead of the company’s, waiting will only make the problem harder to solve.

Under the Corporations Act 2001 (Cth), directors are required to act:

• In good faith
• For a proper purpose
• In the best interests of the company
• With reasonable care and diligence

When those duties are breached, there are clear and powerful legal remedies available.

Common Warning Signs of Director Misconduct

• Restricting your access to financial records or banking platforms
• Making major decisions without board approval
• Transferring company funds to related entities
• Diverting business opportunities to themselves or associates
• Using company assets or staff for personal benefit
• Shadow directing through family members or proxies

If you’ve suddenly lost visibility or control over financial information — treat that as a red flag. It is often the first sign of a deeper issue.

First Principle: The Company Comes First

A director cannot justify self-interested conduct because they believe they contributed more, hold more shares, or intend to “fix it later.”

The duty is owed to the company — not the director’s personal interests.

Immediate Steps to Protect Your Position

1. Document Everything

Save board papers, bank statements, screenshots, and communications.

2. Secure or Restore Access to Financial Records

Access is leverage — and necessary to assess misconduct.

3. Avoid Emotional Confrontation

Confrontation typically leads to concealment, not transparency.

4. Get Independent Legal Advice

Early positioning determines outcome and leverage.

Legal Remedies Available to You

Injunctions

Emergency Court orders to stop ongoing misconduct.

Access to Books Orders

If you’ve been locked out, the Court can compel access.

Compensation and Recovery

Where funds have been misused or diverted.

Oppression Proceedings (s 232)

If the conduct is oppressive or unfair, the Court can:

• Replace directors
• Compel a fair-value share buy-out
• Restructure governance
• Issue injunctions

Just and Equitable Winding Up

Used where trust has irretrievably broken down.

Quiet Resolution vs Litigation

Not every director dispute ends in Court. Many resolve through:

• Share buy-out negotiations
• Board restructure
• Mediation
• Governance agreements

However, the earlier you act, the stronger your position.

Our Approach

At Boss Lawyers, we act for directors, founders and shareholders in high-stakes governance disputes.

• Strategic – focused on commercial outcomes
• Discreet – protecting reputations wherever possible
• Decisive – when urgent action is required, we move fast

The objective is not simply to “win.” The objective is to protect value.

Speak With Us Confidentially

If you are concerned about a co-director’s conduct, the first step is a private conversation with someone who understands these disputes.

This is the work we do every day.

Contact
Mark Harley, Principal
Boss Lawyers
Phone: +61 7 3188 0200
Email: mharley@bosslawyers.com.au