What happened
On 5 March 2026, the Federal Court of Australia (Court) delivered a landmark liability judgment in Australian Securities and Investments Commission v Bekier [2026] FCA 196 (Star Case). The case — the culmination of a protracted civil penalty proceeding commenced by the corporate watchdog in 2022 — examined the conduct of senior executives, officers and non-executive directors of The Star Entertainment Group Ltd (Star) in relation to alleged failures to manage serious operational risks, particularly money laundering.
Justice Michael Lee’s 500-page judgment in the Star Case was masterfully conceived through his critical observations and narrative panache of the modern-day boardroom, corporate culture and the duties of both executive and non-executive directors. However, while Justice Lee’s judgement may be full of colourful language, the underlying message is clear: corporate governance is increasingly concerned not simply with the decisions boards make, but with the systems through which information and risk reach them.
The Court found that Star’s then CEO and Chief Legal & Risk Officer breached their duties under section 180(1) of the Corporations Act 2001 (Cth). However, ASIC’s claims against seven former non-executive directors were dismissed as unsupported by the evidence.
The allegations raised in the Star Case did not raise new or novel legal principles. The content of the duty is well settled. Rather, the application of the duty is contextual with the Court considering a range of matters including company’s circumstances, the responsibilities of the office held, the information then known, and the decision-making process.
What the Court said: Key governance takeaways
1. The law has not changed — but expectations have
Directors remain entitled to rely on the judgment, information and advice of management without independent verification, unless there is a “red flag” that ought to have awoken their suspicion that something is amiss. Section 180(1) does not impose a standard of perfection — making a mistake does not in itself demonstrate a lack of due care and diligence.
That said, as Justice Lee observed, “times have changed” — the law now expects significantly more of officers of a corporation in discharging their duties and when delegating to others.
2. Executive and Non-Executive Directors are held to different standards
The Star Case reinforces an enduring principle: directors’ duties are contextual. Boards must be informed about material risks and take reasonable steps to satisfy themselves that management is handling them appropriately, but mere board membership does not attract liability where evidence of specific failures is absent.
3. Information flow is a governance obligation
Directors — both executive and non-executive — cannot passively rely on voluminous board packs or assume that significant risks are being adequately managed. They must take reasonable steps to understand what is before them and ask probing questions of management. The judgment also flagged the growing importance of leveraging technology, including artificial intelligence, to assist comprehension of large information flows — without substituting for human judgement.
4. Risk must be actively assessed — not just acknowledged
Directors must assess the reasonably foreseeable risks posed by strategic decisions against their potential benefits. A failure to integrate risk insights — whether from internal reports or external signals — can expose officers to liability under the care and diligence standard.
5. Culture and values must be more than platitudes
The Court was direct: while it is easy to be cynical about 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.” Culture is an aspect of risk governance that demands active attention — particularly where the business model is inherently high-risk.
Practical steps your organisation should take now
- Strengthen risk escalation frameworks — ensure material compliance concerns are flagged early and clearly to the board.
- Seek independent assurance — periodic reviews of key risk areas (including AML/CTF compliance) validate management’s conclusions.
- Evaluate culture and incentives — boards should regularly assess whether the company’s culture inadvertently prioritises revenue growth over effective compliance and risk management.
- Improve board minutes and documentation — accurate minutes that capture board deliberations on risks and decisions are critical, as poor minute-keeping can complicate future assessments of directors’ oversight and conduct.
How Source can help
The Star judgment offers both a caution and a blueprint: reinforce the systems and practices that ensure boards act as effective guardians of corporate integrity and legal compliance. Source is here to help you do exactly that.
Our governance and compliance teams provide:
- Board Paper and Governance Support — preparation and guidance for clear, concise and risk-focused board papers, agendas and minutes so that material governance and risk issues are elevated and understood at the right level.
- Company Secretarial Services — managing ASIC compliance, minute-taking, board and committee charters.
- Governance Reviews and Board Performance Evaluations — identifying weak spots in governance frameworks before they become a crisis.
- Director Support and Duty Guidance — working alongside boards to embed governance best practice and ensure directors are asking the right questions.
- Risk and AML/CTF Compliance Frameworks — reviewing, designing and implementing tailored risk management frameworks aligned with regulatory expectations, including specialised AML/CTF program development and independent compliance reviews.
The Star case is a timely reminder that governance is not a box-ticking exercise — it is a leadership responsibility.
If your board or company would like to strengthen its governance frameworks, risk reporting or compliance practices, we invite you to reach out to the Source team today. We are ready to support you in meeting your legal obligations and building a stronger governance culture from the top down. Get in touch >
Prepared by Daniel Petravicius, Senior Company Secretary – Governance
