Are you a director that has recently been appointed to the board of a subsidiary company? If you are, then it is important that you remember that your duty is to the subsidiary company to which you are a director, not the parent company which appointed you.
Some of the duties you will be required to uphold include:

  • The duty to act in good faith
  • The duty to exercise skill and care, and
  • The duty not to trade while insolvent.

You should be mindful that there may be situations where the best interests of the subsidiary company might differ from the best interests of the parent company or the corporate group. When making decisions that are in the best interests of the parent company or the corporate group, it is important that you are satisfied that the decision is also in the best interests of the subsidiary company.

Where there is such a conflict of interest that cannot readily be resolved, you should bring it into the open. This may involve advising the chair (of either the parent or subsidiary body) and if necessary discussing it at a board meeting.

Should you have any further questions in relation to the above, contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.