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A recent Federal Court decision involving The Star Entertainment Group has sent a clear message to every director of an Australian company: the boardroom table offers no hiding place for executive misconduct — but for non-executive directors, the question of what you knew, and what management told you, has never mattered more.
The decision provides important practical guidance on how section 180(1) of the Corporations Act 2001 (Cth) is applied in practice — and what it means for both executive and non-executive directors navigating complex governance environments.
What Is the Duty Under Section 180(1)?
Section 180(1) of the Corporations Act 2001 (Cth) requires that a director or officer of a corporation exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:
- were a director or officer of a corporation in the same circumstances; and
- occupied the same office and had the same responsibilities as the director or officer.
This is not a passive obligation. It requires active, informed, and engaged governance — not just attendance at board meetings or rubber-stamping management decisions.
What Happened in the Star Case?
ASIC alleged that several officers and directors of Star Entertainment Group breached their duty of care and diligence under section 180(1) in relation to conduct between 2016 and 2020. The allegations arose from Star’s well-documented regulatory and compliance failures during that period, including serious concerns about money laundering controls, junket operators, and casino licensing obligations.
The Federal Court’s findings were nuanced — and critical for directors to understand.
Executive directors: breach found. The Court found that two executive directors — Star’s former Chief Executive Officer and former General Counsel and Company Secretary — had breached their duties under section 180(1). As executive directors, they were in daily control of management, had direct knowledge of significant compliance and regulatory issues, and bore primary responsibility for the governance failures that occurred.
Non-executive directors: no breach found. Critically, the Court declined to make similar findings against Star’s non-executive directors. Why? Because the evidence established that management had failed the board. The board had not been given adequate information about the nature and seriousness of the compliance and regulatory risks. Without clear, accurate escalation from management, the Court could not establish that the non-executive directors had failed in their own duties.
The Critical Finding: What Management Tells (or Doesn’t Tell) the Board
This is the aspect of the Star decision that deserves the most attention.
The Court’s reasoning confirms what experienced governance practitioners have long understood: a non-executive director’s ability to discharge their duty of care depends substantially on the quality and accuracy of information provided to them by management. If management conceals, minimises, or fails to adequately convey significant risks, non-executive directors may not be held responsible for outcomes they had no real ability to identify or address.
But — and this is the important qualifier — this does not mean non-executive directors can sit passively and trust everything management tells them. The decision also makes clear that directors must actively interrogate the information they receive. Board materials must “clearly convey the nature and seriousness of key risks” so that directors can properly understand, question, and oversee management’s conduct.
In other words: if the board papers don’t adequately disclose a serious risk, directors have a duty to probe — to ask the hard questions, to push back, to request further detail. The non-executive directors in Star were not found to have breached their duties because there was insufficient evidence that, had they interrogated management further, they would have uncovered the full picture. That is a narrow and fact-specific finding.
What This Means in Practice for Directors
The Star decision provides several practical lessons for directors of Australian companies — both large and small:
1. Executive directors bear greater personal exposure. If you are an executive director — CEO, CFO, General Counsel, Managing Director — you occupy a dual role. You are both a member of management and a fiduciary of the company. You cannot hide governance failures behind the corporate veil. You are expected to know, to act, and to disclose material risks to the board.
2. Non-executive directors must actively interrogate board papers. The protection afforded to non-executive directors in Star was tied to the facts of that case. It does not create a general exemption. Non-executive directors who receive board papers that are vague, incomplete, or downplay significant risks have a duty to seek clarification — in writing, on the record.
3. Governance documentation matters. The Court’s findings turned in significant part on what could and couldn’t be established from the evidence. Directors who document their questions, concerns, and dissents — in board minutes, in correspondence, in meeting notes — are in a far stronger position if ASIC or a liquidator later scrutinises their conduct.
4. ASIC is watching. This proceeding was ASIC-initiated. The corporate regulator has publicly committed to ongoing enforcement of directors’ duties as a 2026 enforcement priority. The Star decision confirms that ASIC is willing to pursue executive officers personally — and that the outcomes of such proceedings can be career-defining.
The Practical Warning for Queensland Business Directors
The Star Entertainment case involved a publicly listed company with a sophisticated board and governance infrastructure. But section 180(1) applies equally to directors of private companies, proprietary companies, and small businesses.
Queensland businesses facing regulatory scrutiny, financial pressure, or governance disputes often involve the same core question: did the director know, or should they have known, and what did they do about it?
Whether you are a director of an ASX-listed company, a family business, or a construction company under pressure — the duty of care and diligence requires active, informed decision-making. It requires that you ask questions. It requires that you act on material information. And it requires that, when things go wrong, you can demonstrate that you discharged your obligations.
Boss Lawyers Can Help
At Boss Lawyers, we regularly advise directors on their duties and obligations under the Corporations Act 2001 (Cth), including in circumstances where those duties are under scrutiny by ASIC, a liquidator, or a fellow director.
If you are a director facing regulatory inquiry, a director dispute, or a shareholder challenge to how the company has been run, early legal advice is essential.
Call us on 1300 267 711 or contact us online to speak with an experienced commercial lawyer. We operate from Brisbane’s CBD and advise directors and business owners across Queensland.
Facing a commercial dispute? Early legal advice is essential. Our commercial litigation lawyers Brisbane provide strategic advice from initial dispute assessment through to trial or negotiated resolution. Call Boss Lawyers on 1300 267 711.
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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
