The decision of the Federal Court in ASIC v Bekier [2026] FCA 196 marks a significant development in the law governing directors’ and officers’ duties under s 180(1) of the Corporations Act 2001 (Cth). While the statutory formulation of the duty of care and diligence remains unchanged, the judgment provides a more exacting articulation of how that duty operates in practice—particularly in the context of modern corporate governance structures where information asymmetry between management and the board is both inevitable and consequential.
The proceedings arose from systemic compliance failures within The Star Entertainment Group Limited between 2016 and 2020, including dealings with high-risk junket operators, the use of payment mechanisms capable of disguising the true nature of transactions, and communications to financial institutions that were, at best, incomplete and, at worst, misleading. The Australian Securities and Investments Commission pursued civil penalty proceedings against senior executives and non-executive directors, alleging breaches of s 180(1).
The Court ultimately found that the Chief Executive Officer and the General Counsel/Company Secretary had contravened their statutory duties, while dismissing the claims against the non-executive directors. However, to characterise the decision as a simple allocation of liability would be to overlook its deeper significance. The judgment is, more fundamentally, a detailed exposition of how responsibility is allocated within a corporate hierarchy when critical information is either not escalated or is insufficiently interrogated.
A central theme of the Court’s reasoning is that the duty of care and diligence is inherently contextual. The standard remains objective, but its application depends acutely on the particular responsibilities assumed by the officer in question and, critically, on the information actually available to that officer at the relevant time. The Court rejected any approach that would assess liability by reference to hypothetical knowledge or with the benefit of hindsight. Instead, the inquiry is directed to whether a reasonable person, occupying the same position and armed with the same information, would have acted differently.
Against that framework, the findings against the Chief Executive Officer are instructive. The Court did not suggest that the CEO was unaware of the underlying risks. On the contrary, the evidence demonstrated that he was in possession of a series of internal reports and communications that, when viewed cumulatively, pointed to serious regulatory exposure. The breach lay not in ignorance, but in the failure to ensure that this information was properly synthesised and conveyed to the board. Board papers presented a materially attenuated picture of risk, and adverse findings were not escalated with the clarity or urgency that their significance demanded.
The judgment makes plain that a CEO occupies a pivotal position in controlling the flow of information to the board. That control carries with it a corresponding responsibility. It is not sufficient to passively transmit selected information or to rely on fragmented disclosures. Where information is material to the company’s legal or regulatory position, the CEO is required to ensure that it is presented to the board in a manner that is both complete and intelligible. Any attempt, whether deliberate or inadvertent, to filter or dilute such information is inconsistent with the standard of care required by s 180(1).
The Court’s treatment of the General Counsel’s role is, if anything, more consequential. It reaffirms, in unequivocal terms, that an in-house lawyer who is also an “officer” owes duties directly to the corporation, and that those duties are not displaced or diminished by internal reporting structures. The submission that the General Counsel’s responsibilities were effectively mediated through the CEO was rejected as misconceived. Drawing upon the reasoning in Shafron v ASIC, the Court emphasised that the possession of legal expertise heightens, rather than attenuates, the standard of care.
In practical terms, the judgment underscores that a General Counsel cannot confine themselves to a reactive or facilitative role. Where legal risks are identified—particularly those with potential regulatory or reputational consequences—there is a positive obligation to ensure that such risks are appropriately escalated to the board. This obligation persists even where doing so may cut across management preferences or commercial objectives. The approval, or acquiescence in, communications that are liable to mislead external stakeholders cannot be justified by reference to commercial expediency. In this respect, the decision serves as a clear reminder that the client of in-house counsel is the corporation itself, not the individuals who comprise its management.
Although ASIC did not succeed against the non-executive directors, the Court’s reasoning does not provide them with unqualified comfort. The absence of liability was largely attributable to the fact that critical information was never brought to their attention. In those circumstances, it could not be said that they had failed to act on information they did not possess. Nevertheless, the Court was careful to emphasise that reliance on management is not without limits. The standard expected of non-executive directors has evolved to require a more active and engaged approach to oversight.
The judgment suggests that non-executive directors must do more than passively receive board materials. They are expected to read those materials critically, to identify inconsistencies or gaps, and to probe management where necessary. While they are not required to second-guess every operational decision, they must bring an “intelligent and diligent” attention to the affairs of the company. The failure to ask obvious questions, or to interrogate explanations that appear incomplete, may in an appropriate case constitute a breach of duty.
A further aspect of the decision concerns the quality and presentation of information provided to the board. The Court was critical of practices that resulted in either the overloading of board materials or the obscuring of key issues within voluminous documentation. Effective governance requires that information be curated and presented in a manner that enables directors to understand and assess the issues confronting the company. The mere provision of large quantities of material does not satisfy this requirement if it has the effect of diluting the salience of critical risks.
The Court also addressed, albeit briefly, the increasing use of technological tools, including artificial intelligence, in the preparation of board materials. While acknowledging that such tools may have a role to play, the Court emphasised that they cannot substitute for the exercise of human judgment. Responsibility for the accuracy, completeness and clarity of information ultimately rests with those who prepare and present it.
The attempted reliance by the CEO on the business judgment rule was unsuccessful. The Court found that the statutory preconditions for its operation were not satisfied, in particular because the decision-making process was not sufficiently informed. This aspect of the judgment reinforces the limited protective scope of s 180(2). The rule does not operate as a general shield against liability, but only in circumstances where a genuine business judgment has been made on an appropriately informed basis and in good faith.
Viewed in its entirety, ASIC v Bekier represents a recalibration of the practical content of directors’ and officers’ duties. It does not impose new obligations in a formal sense, but it makes clear that existing duties will be applied with greater scrutiny in circumstances where failures of information flow or oversight contribute to corporate misconduct.
The decision is, at its core, a statement about accountability within corporate governance. It affirms that responsibility cannot be diffused through organisational structures or obscured by deficiencies in reporting. Those who control information must ensure its proper dissemination; those who receive it must engage with it critically. In an environment of increasing regulatory intensity, the judgment serves as a reminder that the effectiveness of governance ultimately depends not on formal processes alone, but on the willingness of individuals to exercise independent judgment and to confront, rather than accommodate, uncomfortable truths.
Should you have any issues about your duties as a director or officer of an Australian company, please contact us at enquiry@simplify-law.com for a free consultation.
