On 5 March 2026, the Federal Court handed down a significant judgment in Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196. The decision addressed the scope of directors’ and officers’ duties in the context of governance failures, Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) risks, and misleading conduct involving major financial institutions.
Two senior executives breached their statutory duties under s. 180(1) of the Corporations Act to exercise their powers and discharge their duties with due care and diligence:
ASIC commenced civil penalty proceedings against 11 former directors and senior executives of The Star Entertainment Group. The regulator alleged that executives and Board members failed to exercise due care and diligence in relation to:
Star senior executives had longstanding awareness of significant compliance and reputational risks, but the Court found that material information was not adequately escalated to the Board.
The Court found Star senior executives had breached s 180(1) by variously failing to:
These failures exposed Star to significant regulatory, operational, and reputational risks.
However, the Court rejected claims against seven former non‑executive directors.
The judgment provides guidance for General Counsel, particularly those operating in regulated environments.
The Court held, applying the High Court’s decision in Shafron v ASIC [2012] HCA 18, that the duties of an in-house General Counsel, including where the individual also holds roles such as Company Secretary or Chief Legal and Risk Officer, cannot be separated and the statutory duty of care and diligence applies to all responsibilities held within the corporation.
Where the General Counsel is a dual office holder, they may reasonably be expected to apply their legal knowledge, training and skills to identify risks that other officers of the corporation may not necessarily have appreciated, particularly those who lack legal experience or expertise, and to recognise that other officers within the corporation may be relying on them to be aware of legal risks, and to guard against the realisation of those risks.
Where the General Counsel holds a practising certificate and is the most senior solicitor employed by the corporation for purposes that include providing legal advice, the General Counsel will be held responsible for the provision of legal advice to the client, even where it is others in the legal team that perform the majority of the day to day advising work.
The Court also reaffirmed that the General Counsel’s client is the corporation itself, rather than the Chief Executive or other individuals. A General Counsel with access to the Board will be expected to raise relevant foreseeable risks with the Board, not just leave it to the Chief Executive to determine the matters to be raised with the Board.
A General Counsel, however, will not generally have a duty to recommend particular decisions or a course of action to the client. A General Counsel’s duty is to provide clear and timely advice to the client.
The Court has adjourned the proceedings for further orders, including civil penalty and potential disqualification hearings.
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