Part a) is a real exercise in doing some research behind this duty in order to understand whether the statement is correct or not. Note that, either in introduction or conclusion, you must state whether the statement is correct or not.

"Company directors have to exercise a very high standard of care and diligence under both the Corporations Act and case law because if they make a decision that causes any damage to the company, they will be personally liable to creditors."

REQUIRED:

Using your knowledge from studying Chapter 13.4, briefly discuss the correctness of this statement. Include in your answer an explanation of the meaning of the directors' duty of care and diligence by reference to the Corporations Act and case law and also a description of any defences available to directors in this situation.