ASX Director Duties After Bekier: Lessons for Small Cap Boards

Julian Rockett
Apr 22
5 min read

Updated: Apr 26

ASX company directors reviewing ASIC enforcement documents — director duties for small-cap boards

Written for chairs, directors and CFOs of ASX-listed entities. If you want to understand your board's exposure on this issue, contact JR3 Legal.

For directors of small-to-mid cap ASX entities, ASIC v Bekier [2026] FCA 196 looks like a big-casino case that does not apply. That reading is wrong.

On 5 March 2026, the Federal Court found that two Star Entertainment executives - the Chief Executive Officer and the Chief Legal & Risk Officer, breached their duty of care under section 180(1) of the Corporations Act 2001 (Cth) (Corporations Act). The non-executive directors did not (ASIC media release 26-040MR, 5 March 2026). The judgment is most useful to a small-cap board precisely because the facts are not the point. ASX small cap director duties remain a constant. These facts relate to a casino, junket operators and the China UnionPay card scheme. The principles are universal and three weeks later ASIC demonstrated that it is applying these principles to compliance failures small caps see more often.

What the Court actually decided

The executive respondents, Matt Bekier (former CEO) and Paula Martin (former Chief Legal & Risk Officer) - breached s 180(1) by failing to respond adequately to identified money-laundering risks associated with junket operators and the China UnionPay card scheme. The risks were not speculative. They had been flagged internally and by external reviews.

The critical operative finding was that management presented the board with filtered and softened risk information, depriving the non-executive directors of what they needed to exercise oversight.

The non-executive directors did not breach their duties. ASIC failed to establish that they had sufficient knowledge of the risks to ground a breach. On 20 March 2026, the Court dismissed the proceeding against the seven non-executive directors, and ASIC has since confirmed it will not appeal that dismissal. The NED position is settled. The Court reinforced that non-executive directors are entitled to rely on the information and reports presented to them by management provided they exercise appropriate scrutiny of that information. Where red flags are visible, that scrutiny is a duty, not a discretion. Reliance is not a shield where directors ignore obvious warning signs.

The respondents sought to rely on the business judgment rule under s 180(2). The Court declined to apply it. The rule requires contemporaneous engagement with the material information — not retrospective rationalisation. A director who cannot show what information they considered and what reasoning they applied at the time of the decision cannot invoke s 180(2) later as an after-the-fact shield.

The penalty phase for Bekier and Martin is listed for hearing on 27 May 2026.

The small-cap parallel — $1.17 million at the Downing Centre

Twelve days after the Bekier judgment, ASIC secured fines totalling $1.17 million at the Downing Centre Local Court against three ASX-listed entities for failing to lodge annual financial reports and to maintain minimum officeholder numbers. Each entity breached s 319(1) (failure to lodge annual financial report) and s 1311(1) of the Corporations Act. Invitrocue Limited was separately prosecuted under s 201A(2) for failing to maintain minimum director numbers, and Boyuan Holdings Limited under s 204A for failing to maintain the minimum company secretary requirement. The individual penalties were $240,000 (Urban Ecological Systems Limited), $530,000 (Invitrocue Limited) and $400,000 (Boyuan Holdings Limited).

These are not Star Entertainment cases. They are small-to-mid cap ASX entities prosecuted for compliance failures that sit with whoever is watching the statutory calendar. At least three directors of a public company at all times. At least one company secretary at all times. Annual financial report lodged within four months of year-end. Not complicated. Missed anyway.

ASIC has confirmed that financial reporting misconduct is a new 2026 enforcement priority. The March prosecutions are the regulator demonstrating that the priority is operational, not rhetorical. ASIC doubled its new investigations in 2025. The throughput has increased - more files are being opened and more matters are reaching court.

ASX small cap director duties: three takeaways

1. Treat board information quality as a liability issue

Board information quality is upstream of director protection. If the board does not receive accurate, complete and unfiltered information about material risks, the non-executive directors cannot exercise the scrutiny that supports reliance. Bekier is explicit on this: management's failure to apprise the board was itself a critical finding against the executives, and it was what allowed the non-executive directors to establish reliance. The quality of the board paper is a live liability issue, not a governance nicety.

2. Document the business judgment contemporaneously

With respect to ASX small cap director duties, contemporaneous documentation is not optional. The business judgment rule is not a safe harbour that can be constructed after the fact. If a director cannot point to what they read, what advice they took and what reasoning they applied at the time of the decision, s 180(2) is not available. Board minutes that record a decision without recording the information considered and the reasoning applied are weak evidence of a s 180(2) defence.

3. Make one person own the statutory calendar

The statutory calendar has to belong to someone. The Downing Centre cases are not sophisticated. They are calendar failures - annual reports not lodged, minimum officeholder numbers not maintained. In a small-to-mid cap structure where external lawyers handle legal advice and the company secretary handles ASX and ASIC lodgements, these statutory obligations can end up sitting with no one in particular. ASIC is now prosecuting them, at fine levels that are no longer trivial for a small-cap.

For boards of small-to-mid cap ASX entities, the lesson from the March 2026 enforcement cycle is not that director liability has changed. ASX small cap director duties statutory provisions are the same. What has changed is the enforcement environment. ASIC is investigating more, prosecuting more, and willing to pursue matters at all ends of the market. The protection the non-executive directors had in Bekier is available - but only to directors who receive, and scrutinise, good information, and who can show what they did with it.

Boards that want to stress-test their information flows and statutory calendar should do it before ASIC or ASX does it for them.

This article is general information for ASX-listed entities and is not legal advice. Specific advice should be taken on particular circumstances.

─────────────────────────────────────────

Julian Rockett is the Principal of JR3 Legal, an ASX specialist corporate law firm and company secretarial practice based in Sydney. He acts as external general counsel and company secretary for ASX-listed entities, primarily in the resources, energy and technology sectors. Contact Julian directly at julian@jr3legal.com.