Corporations Act 2001
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 discharged, 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 solely because of one or more of the following:
(i) a breach of trust by the corporation;
(ii) the corporation ' s acting outside the scope of its powers as trustee;
(iii) a term of the trust denying, or limiting, the corporation ' s right to be indemnified against the liability.
The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection.
Note: The person will not be liable under this subsection merely because there are insufficient trust assets out of which the corporation can be indemnified.
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)
This section does not apply to a liability incurred outside Australia by a foreign company. 197(3A)
This section does not apply to a liability incurred by a corporation that is:
(a) a notified foreign passport fund; or
(b) the operator of a notified foreign passport fund acting in that capacity.
This section does not apply to a liability incurred by a registrable Australian body outside its place of origin. 197(5)
This section does not apply to a corporation that is an Aboriginal and Torres Strait Islander corporation.
Note: Section 271-1 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 deals with the liability of directors of Aboriginal and Torres Strait Islander corporations for debts and other liabilities incurred by those corporations as trustee.