In March 2026, the Federal Court handed down its judgment in Australian Securities and Investments Commission v Bekier [2026] FCA 196 — one of the most significant decisions on director duties in recent years. The case arose from the Star Entertainment Group’s use of China UnionPay cards at its casinos. But the legal principles it confirms go well beyond casinos. Every Queensland director of a company with management layers or a board structure needs to understand what the court said about the duty of care and diligence under section 180(1) of the Corporations Act 2001 (Cth).
What Is the Duty of Care and Diligence?
Section 180(1) of the Corporations Act requires every director and officer to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise in those circumstances. The provision sets an objective standard. It is not measured by what a particular director believed was appropriate — it is measured by what a reasonable person in that position, with that company’s circumstances, would have done.
The standard varies with the role. A non-executive director on a public company board is held to a higher standard than a passive director of a small private company. The more authority and information a director has, the higher the standard applied.
What Happened in ASIC v Bekier?
ASIC alleged that several executive and non-executive officers of Star Entertainment breached their s 180(1) duty by approving or failing to prevent conduct relating to the use of China UnionPay cards — cards typically used for personal spending — to fund gambling activities. ASIC argued the officers knew enough to have acted differently.
The court drew a critical distinction between officers who were fully informed about the gravity of the risks and those who were kept in the dark by subordinates. For the latter group, the court found: knowing about a risk at a general level is not enough to establish a breach of duty. A director must have been sufficiently informed about the specific risk, and must then have failed to respond appropriately, before liability arises.
The Information Asymmetry Principle — What Bekier Confirms
The most important principle from the Bekier decision for Queensland company directors is what might be called the information asymmetry principle:
- If a director was not given adequate information about a specific risk by management, the director’s failure to act on that risk will not, without more, constitute a breach of s 180(1).
- However, if a director was given information that should have prompted inquiry — and failed to follow up — that failure can constitute a breach.
- And if a director was fully informed and either approved the conduct or failed to exercise their authority to stop it, liability follows.
The principle is not a licence for directors to stay deliberately uninformed. Courts have made clear across multiple decisions that a director cannot construct a shield of ignorance. Directors have a positive obligation to ensure they receive adequate information to make proper decisions. What Bekier confirms is that the quality and completeness of the information actually provided to a director is relevant to assessing whether a breach occurred.
Five Practical Implications for Queensland Directors
1. Board Information Hygiene Is Your First Line of Defence
Directors should insist on receiving timely, accurate, and complete information on material risks. Board papers should include specific risk reporting — not just financial summaries. If management is not providing adequate risk information, directors have an obligation to ask for it. The Bekier decision does not mean directors can take comfort in being kept in the dark — it means that when the information failure is on management’s side, the legal exposure may lie with management rather than the board.
2. Know What You Know — and What You Should Have Known
Courts will examine what information a director actually had, what information they should have sought, and what they did with the information they had. Emails, board minutes, and management reports all become evidence. If a director received a briefing note flagging a potential regulatory risk and did not follow up, the court will ask: what would a reasonable director have done with that information?
3. Non-Executive Directors Are Not Immune
Bekier arose partly from allegations against non-executive directors — individuals with oversight roles, not operational control. The decision confirms that non-executive directors must still actively engage with risk reporting and exercise independent judgment. Attendance at board meetings without genuine engagement does not satisfy s 180(1).
4. Escalation Obligations Matter
Where a director becomes aware of a risk — even through incomplete information — that director has an obligation to escalate their concern, seek further information, or record their objection if they cannot obtain a satisfactory response. A director who raises a concern in a board meeting and is overruled is in a different position from one who said nothing. Document disagreement. Minutes of board meetings are often the only contemporaneous record of what was known and when.
5. Reliance on Management Does Not Automatically Protect You
Section 189 of the Corporations Act allows a director to rely on information provided by management, professional advisers, or board committees — but only if that reliance is reasonable in the circumstances. A director who relies on management assurances but has other information suggesting those assurances are wrong cannot invoke s 189 as a defence. Reasonableness is assessed objectively.
When the Risk Becomes Personal — Director Liability Exposure
A breach of s 180(1) is a civil penalty provision. ASIC can seek pecuniary penalties (up to $1.65 million per contravention for individuals), compensation orders, and disqualification from managing corporations. In serious cases involving dishonesty, criminal liability under s 184 may also arise.
These are not abstract risks. ASIC has been systematically increasing its director enforcement activity over the past three years. The Bekier proceedings — and other recent enforcement actions against named directors — signal ASIC’s willingness to pursue individual officers for governance failures, not just the companies they serve.
What to Do Now — Practical Steps for QLD Directors
- Review your board’s information architecture: Are management reporting mechanisms providing directors with adequate risk information? If not, address this now — not after an incident.
- Understand what you are signing: Before approving any resolution, directors should understand what they are authorising and what the risks are. Saying “I relied on management” is only a defence if that reliance was reasonable.
- Maintain your own records: Keep copies of board papers, minutes, and any communications relevant to decisions you were involved in. If things go wrong, your personal records may be critical.
- Seek advice early: If you are a director of a company facing a regulatory inquiry, an ASIC investigation, or a significant governance dispute, obtain independent legal advice before participating in any further decision-making.
Frequently Asked Questions About Director Duty of Care — s180 Corporations Act
What did ASIC v Bekier [2026] FCA 196 decide about director duties?
The court found that non-executive directors who were not adequately informed by management about the gravity of specific risks did not breach their s 180(1) duty of care. The decision confirms that the information actually provided to a director is relevant to assessing breach — but it also confirms that directors have an obligation to seek adequate information and escalate concerns when they become aware of risks.
Can a director claim they didn’t know about a risk to avoid s 180 liability?
Not automatically. Courts distinguish between directors who were kept genuinely uninformed despite reasonable efforts to obtain information, and directors who constructed deliberate ignorance. A director who failed to ask obvious questions or ignored warning signs cannot rely on ignorance as a defence. The standard is objective — what would a reasonable director have known and done?
What is the difference between s 180 (duty of care) and s 181 (duty of good faith)?
Section 180(1) imposes an objective duty of care and diligence — assessed against a reasonable person in the same circumstances. Section 181 requires directors to act in good faith in the best interests of the corporation and for a proper purpose — this is a more subjective, intention-based duty. A director can breach s 180 without bad faith; equally, a director can act in good faith but still fall below the required standard of care.
What penalties can ASIC impose for a breach of s 180?
Section 180(1) is a civil penalty provision. ASIC may seek a pecuniary penalty (currently up to $1.65 million per contravention for individuals), a compensation order, and disqualification from managing corporations. Criminal liability under s 184 may arise if the director was reckless or dishonest — with potential imprisonment.
If your company is facing a regulatory inquiry, governance dispute, or director liability exposure, the time to obtain legal advice is now. Mark Harley and the team at Boss Lawyers’ director disputes practice regularly advise directors in Federal Court and state court proceedings, ASIC investigations, and personal liability matters. Call 1300 267 711 or contact our insolvency lawyers Brisbane team for a confidential discussion.
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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
