**Controlling Act:** Corporations Act 2001 (Cth).

**(a)** Corporations Act 2001 (Cth) – the principal statute regulating companies and directors’ conduct in Australia.

**(b)** Directors’ duties provisions engaged:
- s 180(1): duty to exercise powers and discharge duties with the degree of care and diligence that a reasonable person would in the circumstances. *Key concept:* objective “reasonable director” standard; continuing to trade and incur debts after explicit warnings of insolvency falls below this standard.
- s 181(1): duty to act in good faith in the best interests of the corporation and for a proper purpose. *Key concept:* requires undivided loyalty; diverting a profitable customer contract to a company the director personally owns subordinates the company’s interests to the director’s own.
- s 182(1): duty not to improperly use position to gain an advantage for oneself or another person or to cause detriment to the corporation. *Key concept:* prohibits self-dealing through positional power; the diversion constitutes an improper transfer of corporate opportunity.

**(c)** Insolvent trading provision engaged:
- s 588G(1)–(2): director must not allow the company to incur a debt when the company is insolvent, or becomes insolvent by incurring the debt, and there are reasonable grounds for suspecting insolvency. *Key concept:* “cash-flow” insolvency test (s 95A) – company unable to pay debts as and when they fall due; director who knows or should know of insolvency (here, bookkeeper’s warning plus ceased payments and no funding) is personally liable for new debts (including credit purchases of stock).