Governance accountability after ASIC v Bekier & Ors: key lessons for boards and general counsel

The Federal Court’s recent decision in ASIC v Bekier & Ors¹ delivered a clear governance signal for boards, officers and general counsel. The proceedings followed a series of domestic public inquiries and royal commissions into major casino operators and arose against a backdrop of heightened regulatory scrutiny in the gambling sector. However, the implications extend beyond that industry. 

Brought by ASIC against 11 current or former Star directors and officers for alleged breaches of the statutory duty of care and diligence under section 180 of the Corporations Act 2001 (Cth), the significance of the judgment lies in what it reveals about how courts and regulators are scrutinising the architecture of corporate accountability and board oversight – who knew what and when, and whether systems were capable of ensuring material risks reached the board in time to enable effective supervision. 

While the Court found that the non-executive directors of The Star Entertainment Group Limited (Star) had not breached their duties, it held that the company’s CEO and General Counsel breached their officers’ duties by failing to ensure serious risks were properly escalated to the board. The judgment provides important guidance for both directors and officers. 

1. Boards must control the information environment

The judgment contains a notable discussion of board pack overload. The Court emphasised that the board must "control the information they receive" and take reasonable steps to position themselves to guide and monitor management.² Directors are not passive recipients of board papers. The duty of care requires "real engagement with information provided to them", a "diligent and intelligent interest" in available information, and an "enquiring mind".³

In practical terms, modern director liability cases will involve the court in an examination of reporting structures, escalation mechanisms, board minutes and committee records – demonstrating whether the board exercised judgment, rather than simply receiving information.

2. Reliance on management has clear limits 

Directors may rely on management to bring problems or irregularities to their attention, but only where there is no reason to doubt management’s honesty, trustworthiness or competence. Absent grounds for suspicion, it may be reasonable to rely on advice without independently verifying underlying data or circumstances.

However, reliance on management is not a substitute for the board’s own attention to matters that fall specifically within its responsibilities. Directors must bring an independent and inquiring mind to the information before them. When “warning signals” emerge, reliance without probing, challenge or verification becomes increasingly difficult to defend.⁴ At that point, the obligation shifts from reliance to inquiry. 

3. The business judgment rule turns on evidence of judgment being exercised

The decision reinforces the Court’s narrow interpretation of the business judgment rule under section 180(2) of the Corporations Act. The statutory safe harbour requires a conscious exercise of judgment – a “decision to take or not take action”.⁵ A director who simply fails to turn their mind to what safeguards ought to be in place has not made a business judgment. 

Equally, the rule does not apply to ongoing supervisory and monitoring functions through which boards oversee corporate risk. In this context, board minutes assume critical importance. Minutes are the primary evidence that directors engaged – that they asked questions, sought further information, challenged assumptions and required follow-up where risks were identified. If the minutes are silent, it is difficult to establish that any business judgment was exercised.

4. Culture and values are matters of governance, not rhetoric 

One of the more pointed passages in the judgment concerned organisational culture. The Court observed that while it is easy to be cynical about corporate governance statements identifying the board’s role as “overseeing the Company’s organisational culture and values”, for boards who adopt them “one presumes they are supposed to be more than platitudes”.⁶

For a casino operator, Lee J observed, “this was no ordinary enterprise”⁷ and that the role demanded vigilance. The clear message is that culture is not an aspirational construct, but an aspect of risk governance that requires active attention – particularly where the business model carries inherent regulatory or reputational risk.

5. AI may assist understanding, but cannot replace judgment

Justice Lee acknowledged the "profound impact" of AI on how information is exchanged and analysed, noting that directors may already be using AI informally to prepare for board meetings.⁸ However, his Honour warned that "the use of technology may assist comprehension, but it cannot displace… informed human judgment".⁹ The judgment underscores the risks of informal "shadow" use of AI and the importance of governing its use intentionally through formal frameworks. Regardless of the tools employed, the core requirement remains the same – directors must be provided with information "in a form that is both comprehensive and capable of proper digestion”.¹⁰

These observations sit alongside a broader trend in regulatory scrutiny of AI governance. Recent commentary from Australian regulators has emphasised weaknesses in board‑level oversight, escalation and assurance mechanisms for AI‑enabled systems. Together, these developments reinforce that the governance challenge posed by AI extends beyond information and escalation frameworks to whether those frameworks are capable of supporting informed oversight of AI‑related risks.

6. General counsel responsibility for escalation 

The decision is a reminder that the general counsel’s duties are owed to the company, not to the CEO or other executives. Reliance on the CEO to escalate issues to the board is unlikely to excuse a failure to ensure the board is properly informed of material legal and regulatory risks. 

An in-house counsel who is also a company officer cannot compartmentalise their duties by reference to their different roles. Legal training brings with it heightened expectations – general counsel can reasonably be expected to identify risks that other officers may not appreciate.

Why non-executive directors avoided liability 

A question that inevitably arises is how the non-executive directors avoided liability despite the Court’s findings of significant governance failures within the organisation. The answer lies in the Court's careful distinction between alleged failures of management and failures of board oversight. 

ASIC faced a difficult evidentiary challenge. It alleged, on the one hand, that senior executives failed to ensure that critical risk information was escalated to the board, while simultaneously contending that non-executive directors should have identified the inadequacy of the information they received. Reconciling those propositions proved problematic on the evidence before the Court. In circumstances where the failures lay in management’s escalation of information, ASIC was unable to establish that the non‑executive directors had sufficient notice of the underlying risks to trigger a breach of their oversight obligations.

Governance liability, escalation failure and D&O insurance implications

Although the decision applies established, rather than novel, legal principles, it may nevertheless have meaningful implications for the directors and officers’ insurance market. The current, relatively soft D&O insurance environment may shift if underwriters in Australia and London are not convinced that policyholder cohorts are actively managing governance risk, particularly in relation to information flow, escalation and board oversight. 

Companies in the process of purchasing or renewing D&O insurance should therefore expect closer scrutiny from underwriters and be prepared to respond to more pointed questions about their governance frameworks and practices, including how material risks are identified, escalated and documented.

Governance accountability in practice: escalation, oversight and the modern risk lens

ASIC has announced it will not appeal the dismissal of the claims against the non-executive directors. Regardless, the decision confirms that modern governance liability operates on both sides of the boardroom table. Failures of escalation and information flow expose senior officers, while failures of oversight may expose non-executive directors.

More broadly, ASIC v Bekier & Ors underscores a shift in how governance risk is being assessed by regulators and courts. The focus is moving away from isolated decisions and toward the systems through which information is generated, filtered, escalated and recorded. For boards and senior officers, the critical question is no longer simply whether risks existed, but whether governance frameworks were capable of ensuring those risks reached the board in time to enable meaningful engagement.

Looking ahead, organisations should focus on reviewing the effectiveness of their governance arrangements post-ASIC v Bekier & Ors – how reporting lines function in practice, how material risks are prioritised and escalated, and how board engagement is evidenced. Enforcement focus will increasingly turn on the effectiveness of these systems, and whether accountability is matched by disciplined oversight at every level of the organisation.

^{[1] Australian Securities and Investments Commission v Bekier & Ors (Liability Judgment) [2026] FCA 196 (ASIC v Bekier & Ors).}

^{[2] ASIC v Bekier & Ors, at [382]–[383].}

^{[3] ASIC v Bekier & Ors, at [395] and [1945].}

^{[4] ASIC v Bekier & Ors, at [1464].}

^{[5] ASIC v Bekier & Ors, at [1952].}

^{[6] ASIC v Bekier & Ors, at [1952].}

^{[7] ASIC v Bekier & Ors, at [1952].}

^{[8] ASIC v Bekier & Ors, at [390].}

^{[9] ASIC v Bekier & Ors, at [1956].}

^{[10] ASIC v Bekier & Ors, at [393].}