A company is treated like a person under the law. It can own property, take on debts, and sue or be sued in its own name. This separation between a company and the people who run it is often called the corporate veil.
Most of the time, this veil protects company directors. If the company gets into trouble, the directors are usually not personally responsible. However, this protection has limits. Directors are expected to act carefully, responsibly, and honestly. When they fail to do so, courts can step in and hold them personally responsible.
Artorios Ink
In 2013, the Australian Competition and Consumer Commission (ACCC) took legal action against a company called Artorios Ink and its directors. The case involved misleading sales practices aimed at five small businesses.
The directors used dishonest tactics to sell printer cartridges. They claimed that the recipients of the printer cartridges had purchased their products. This was not true. They also said Artorios Ink was an approved or regular supplier for well-known companies, even though those companies were not customers.
Artorios Ink sent printer cartridges to small businesses that had not placed an order. The company then attempted to demand payment for these unwanted products.
Decision
Company directors must act with care, skill, and diligence. The Court found that the directors of Artorios Ink deliberately failed to meet these obligations. Their actions were not accidental or careless. Instead, they formed part of a planned strategy to deceive other businesses for financial gain.
Employees and owners of the affected small businesses were misled into believing they had ordered printer cartridges and were required to pay for them. The Court described this conduct as deliberate and carefully planned deception.
Orders
Because of this behaviour, the Court removed the protection normally given to directors. Each director was fined $50,000 and was banned from managing or acting as a director of a company for five years.
Normally, a company alone is responsible for its debts and business dealings. However, when directors breach their duties and engage in dishonest conduct, courts may step in. When that happens, directors can no longer hide behind the company name and may be held personally responsible.
The Artorios Ink case is a clear reminder that running a company comes with real responsibilities. The company structure offers protection, but it is not a licence to mislead or deceive. 
Wal Abramowicz can be contacted at e:WalA@foxstaniland.com.au or (02) 9497 4707