Directors’ Duties in Focus: Practical Insights from ASIC and the Federal Court

Australia’s directors’ duties are back in focus following a recent Federal Court decision concerning the directors of Star Entertainment Group Limited (Star). [1]

The case highlights that while the role of directors is becoming more complex — driven by technology and higher regulatory expectations — meeting directors’ duties is still achievable and remains critical to strong, compliant organisations.

This article explains the practical implications of the case, including how directors can improve the way board information is managed, use artificial intelligence (AI) tools appropriately, and take practical steps to continue meeting their core duties in an increasingly complex regulatory environment.

Directors' duties in the modern world

Directors today operate in an increasingly complex governance landscape shaped by cyber risk, climate‑related disclosure, digitisation, artificial intelligence, and expanding regulatory obligations. In his March 2026 address to the Australian Institute of Company Directors, ASIC Chair Joe Longo,[2] emphasised that modern directorship demands continuous curiosity, active engagement and informed oversight to keep pace with these shifts.

Despite this rising complexity, the foundational duties of directors remain unchanged. Directors must continue to act with care and diligence, in good faith, and in the best interests of the company. As Longo made clear, these obligations do not shift simply because operating environment has become more demanding.

ASIC's case against Star’s directors

The Court’s judgment in the Star case provides one of the clearest recent judicial statements on how directors should engage with board information.

While ASIC’s case against the non‑executive directors was ultimately dismissed, the Court nevertheless articulated important governance principles about the standard of engagement expected of directors generally.

Key principles reaffirmed by the Court include that directors must:

• manage the flow and quality of information presented to the board;
• must maintain a diligent and active interest in board materials; and
• apply an inquiring and sceptical mind to decision.

The Court rejected the notion that the volume or complexity of board papers can excuse disengagement. If materials are unclear, overly dense or poorly structured, it is the directors’ responsibility to seek better reporting and clarification.

Directors' use of AI

The judgment also addressed the growing use of AI tools to summarise or distil board papers. The Court accepted that technology can assist directors in navigating large volumes of information, but cautioned against the uncritical or ungoverned adoption of AI‑generated summaries.

Key takeaways include:

• AI can support, but never replace, independent human judgment;
• Directors remain personally accountable for understanding information relevant to their duties; and
• Governance frameworks must evolve to ensure AI is used transparently, responsibly and with appropriate oversight.

This aligns closely with ASIC’s broader commentary on AI, which stresses that directors must understand both the opportunities and risks associated with emerging technologies.

What should directors do now?

Taken together, ASIC’s commentary and the Star decision point to several practical steps for directors:

1. Take ownership of information flows

Ensure board papers are structured, concise and decision‑focused. Where reporting is dense or unclear, directors should request clearer risk summaries, targeted analysis, or supplementary briefings.

2. Maintain continuous curiosity

As emphasised by the ASIC Chair, effective governance depends on directors understanding the business, its financial drivers, technological dependencies and regulatory risks. Curiosity is a core governance discipline not an optional extra.

3. Use AI wisely and transparently

AI tools should sit within clear governance frameworks, supported by human review and documented protocols. Directors should avoid unexamined reliance on AI outputs.

4. Document engagement

Maintaining records of questions asked, concerns raised and advice sought helps demonstrate active engagement and supports evidence of care and diligence if decisions are later scrutinised.

Final word

There’s a clear and consistent message for directors: they must actively engage with their responsibilities, even as governance becomes more complex. Although the non‑executive directors in the Star case were not found to have breached their duties, the Court’s reasoning provides clear guidance on the standards expected of modern boards.

By managing information effectively, using AI responsibly and maintaining disciplined, curious oversight, directors can continue to meet their core duties and support resilient, well‑governed organisations.

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• Company Registration
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More information from Maddocks

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More Cleardocs information on related topics

• Do you need a director ID?
• ASIC Tightens Privacy: Residential Addresses Removed From Purchased Company Extracts
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[1] You can read the full speech here.

[2]Australian Securities and Investments Commission v Bekier (Liability Judgment) [2026] FCA 196. You can read the full case here.