Care and diligence--directors and other officers
(1) A director or other officer of an Aboriginal and Torres Strait Islander corporation must exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise if that reasonable person:
(a) were a director or officer of an Aboriginal and Torres Strait Islander corporation in the corporation's circumstances; and
(b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.
Note 1: This subsection is a civil penalty provision (see section 386-1).
Note 2: Section 265-20 makes special provision for actions done to comply with Native Title legislation obligations.
Business judgment rule
(2) A director or other officer of an Aboriginal and Torres Strait Islander corporation who makes a business judgment is taken to meet the requirements of subsection (1), and the director's or officer's equivalent duties at common law and in equity, in respect of the judgment if he or she:
(a) makes the judgment in good faith for a proper purpose; and
(b) does not have a material personal interest in the subject matter of the judgment; and
(c) informs himself or herself about the subject matter of the judgment to the extent he or she reasonably believes to be appropriate; and
(d) rationally believes that the judgment is in the best interests of the corporation.
The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in the director's or officer's position would hold.
Note: This subsection only operates in relation to duties under this section and the equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence). It does not operate in relation to duties under any other provision of this Act or under any other laws.
(2A) To avoid doubt, a director of an Aboriginal and Torres Strait Islander corporation that is a registered native title body corporate is not taken to have a material personal interest for the purpose of paragraph (2)(b) if the director does not need to give the other directors notice of the interest because section 268-5 applies.
(3) Business judgment is any decision to take or not take action in respect of a matter relevant to the business operations of the corporation.