THE CORPORATIONS LAW

CHAPTER 2D - OFFICERS AND EMPLOYEES

PART 2D.1 - DUTIES AND POWERS

Division 3 - Duty to discharge certain trust liabilities

SECTION 197   DIRECTORS LIABLE FOR DEBTS AND OTHER OBLIGATIONS INCURRED BY CORPORATION AS TRUSTEE  

197(1)  (Liability of director)  

A person who is a director of a corporation when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation:

(a)  has not, and cannot, discharge the liability or that part of it; and

(b)  is not entitled to be fully indemnified against the liability out of trust assets.

This is so even if the trust does not have enough assets to indemnify the trustee. The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection.

197(2)  [Indemnification]  

The person is not liable under subsection (1) if the person would be entitled to have been fully indemnified by 1 of the other directors against the liability had all the directors of the corporation been trustees when the liability was incurred.

197(3)  [Jurisdictional limit]  

This section does not apply to a liability incurred outside Australia by a foreign company.