In this edition, we discuss the disqualification of a NSW director by the Australian Securities and Investments Commission (ASIC) following his involvement in four failed companies and the NSW Court of Appeal’s examination of the elements of the statutory duty of company directors to act in good faith and for a proper purpose under section 181 of the Corporations Act 2001 (Cth) (Corporations Act).
In Over the Horizon, we discuss how directors can ensure their businesses have a voice in the Labor government’s delivery of its reform agenda, following Prime Minister Anthony Albanese’s landslide election win.
Regulatory
ASIC disqualifies NSW director for five years following multiple company failures
On 30 April 2025, ASIC disqualified NSW director Mohamed Chabib from managing corporations for five years due to his involvement in four failed hospitality companies that collectively owed over $1 million to creditors. ASIC found that Mr Chabib acted improperly and failed to meet his obligations as a director by:
Failing to ensure that one of the companies complied with its statutory obligations regarding tax lodgements, not providing the liquidator access to one of its vehicles and making payments to the Australian Taxation Office from its bank account for debts unrelated to it.
Allowing two of the companies to trade while insolvent.
Failing to ensure the tax debts of four companies were paid on time or records were kept properly, such as to enable accurate financial reporting.
This action serves as a useful reminder for directors to be vigilant in overseeing compliance with tax, recordkeeping and solvency requirements, as these are longstanding areas of interest for the corporate regulator.
Legal
NSW Court of Appeal provides guidance on directors’ duties under the Corporations Act
On 24 April 2025, the NSW Court of Appeal published its decision in Sunnya Pty Ltd v He [2025] NSWCA 79. In making the following observations, the court provided important guidance on a director’s duty to act in ‘good faith’ and for ‘a proper purpose’ under section 181 of the Corporations Act:
The duties to act in ‘good faith’ and for ‘a proper purpose’ are separate duties – that is, it is possible for a director to act in the belief that particular conduct is in the best interests of the company, albeit while pursuing an improper purpose.
Dishonesty is distinct from an absence of good faith.
Proving that the director, officer or employee accrued a benefit (or that the corporation suffered a detriment) is not a requirement when demonstrating an improper purpose.
Drawing upon the language of the “Business Judgment Rule” in section 180(2) of the Corporations Act, the court also observed that an ‘honest belief as to purpose’ in connection with section 181 will only be satisfied where that belief is rational. This case illustrates the interrelated subjective and objective elements to the duties under the Corporations Act – indeed, the court described those terms as “unhelpful and distracting”.
Over the Horizon
The economic implications of a landslide Labor victory – how to win the future?
On 3 May 2025, Australians returned the Labor government to office for an historic second term. Business leaders have immediately made calls for the government to convert its clear majority into meaningful economic reform for Australia. After a first term largely defined by crisis management and incremental policy shifts, the Albanese government now has a rare window to pursue structural change – with both a mandate and the parliamentary numbers to act. For business and boardrooms, this is a pivotal moment. Tax reform, industrial relations simplification and productivity-enhancing regulatory changes have long been on the agenda, but political fragmentation and short-termism have often derailed meaningful progress. A stable majority government changes the dynamic – but reform will only succeed if the business community makes a compelling and constructive case for changes that deliver both economic efficiency and social legitimacy.
Boards should monitor evolving reforms which have the potential to reshape the operating landscape – particularly around workforce relations, investment incentives and ESG regulation. Engaging early with policymakers, industry bodies and stakeholders will be essential for shaping outcomes rather than merely reacting to them. While the road to reform is never smooth, conditions may now be as favourable as they’ve been in over a decade. The question is whether political will and business advocacy can align to seize the moment.