Good faith, use of position and use of information

– section 184 of the Corporations Act 2001

Good Faith, Use of Position and Use of InformationThis offence relates to duties of directors and employees within a Company. It is an offence to act dishonestly within these roles. It is also an offence to act against the best interests of the company, to do something outside of your role, or fail to act within your role.

Examples of Good Faith, Use of Position and Use of Information
  • A Director of a company uses his position to engage another company, to gain a luxury holiday for himself and his family.
  • A Director of a company uses the company trust to finance a new home.
  • An employee of a company provides confidential documents to a competitor.
What are some of the possible defences to a charge of Good Faith, Use of Position and Use of Information?
  • You were not intentionally or recklessly dishonest.
  • You acted in the best interests of the company.
  • You acted for a proper purpose.
  • You did not gain anything for yourself or someone else.
  • You did not cause a detriment to the company.

There are other possible defences, depending on the circumstances surrounding the alleged offending. Each matter is unique and requires an individual approach and strategy.

Questions in cases like this
  • What do they think you did?
  • What did you actually do?
  • Were you acting dishonestly?
  • Did you gain personally from your actions?
  • Did your actions cause the company to lose anything?
  • Were you acting within your role?

Court that deals with this charge

This charge may be heard in either the Magistrates’ Court or the County Court.

“Were you dishonest?”
What is the legal definition of Good Faith, Use of Position and Use of Information?

A person who is a director or employee of a company intentionally or recklessly acts dishonestly, and fails to act in the best interests of the company or to fulfil their duties. It is also an offence to use your position or access to information dishonestly to gain a benefit for yourself or someone else, or cause a loss to the company.

Legislation

The section that covers this offence is section 184 of the Corporations Act 2001.1

 


[1] Corporations Act 2001 – Section 184

Good faith–directors and other officers
(1) A director or other officer of a corporation commits an offence if they:
(a) are reckless; or
(b) are intentionally dishonest;
and fail to exercise their powers and discharge their duties:
(c) in good faith in the best interests of the corporation; or
(d) for a proper purpose.
Use of position–directors, other officers and employees
(2) A director, other officer or employee of a corporation commits an offence if they use their position dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
Use of information–directors, other officers and employees
(3) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation commits an offence if they use the information dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.