Marshall Q&A – Topic 3: Company Officers

Question: Who is an ‘officer’ of a company? 

Short Answer: Directors & Company Secretaries and sometimes other key personnel 

Key Takeaways:

  • ‘officers’ have onerous duties to their company and its workers
  • Definition of company ‘officer’ expanded
  • May include decision-makers who do NOT hold a formal ‘officer’ position

A recent decision by the High Court of Australia has expanded how the definition of ‘officer’ is to be interpreted.

The Corporations Act 2001 (Cth) defines ‘officer’ to include:

  • A director or company secretary; or
  • A person:
    • Who makes decisions that substantially affect the company;
    • Who has the capacity to significantly affect the company’s finances; or
    • Whose instructions/wishes the directors follow.

The High Court’s decision in ASIC v King [2020] HCA 4 clarifies the meaning of this definition. 

Mr King was the director and CEO of the parent company of a company group but did not hold a formal office in every subsidiary of that group. He did, however, provide day-to-day instructions to these companies, and effectively assumed responsibility for their operations.

The High Court found that the second limb of the statutory definition would be redundant if it only applied to decision-makers who did hold a formal office. They accepted ASIC’s argument that Mr King intervened in the business of the subsidiaries by ‘directive’ rather than ‘advice’ and that he therefore had the capacity to significantly affect the company’s finances.

ASIC commissioner John Price welcomed the decision, saying it provided ‘clear guidance on who is an “officer” of a corporation’.

What does it mean? 

In light of this decision, all companies should consider their decision-making processes and personnel. People who do not hold a formal office but nevertheless exert substantial influence over major decisions are likely to be considered as ‘officers’.

This may include outside consultants, senior managers, and officers of parent companies. 

Identifying who is an ‘officer’ can have important ramifications, as officers owe significant legal duties towards both the company and its workers.