Hidden risks of economic abuse through company directorships

A/Prof Vivien Chen, 2025

Economic abuse is a form of family violence that severely inhibits victim survivors’ capacities to rebuild their lives.

It has been described as a largely hidden problem although its effects are widely felt.

This research contributes to the burgeoning scholarship on economic abuse, investigating its perpetuation through family-owned companies.

While the companies and assets are controlled by perpetrators, victim survivors bear the consequences of business failure and liability for phoenix activity as ‘straw’ directors.

The study examines how corporate law and the courts have responded to straw directors and allegations of family violence.

It critically examines assumptions that underpin the way in which family violence is often viewed in the context of family companies.

In particular, the assumption that commercial actors enter into business transactions voluntarily, as rational economic men with relatively equal bargaining power, is at odds with the lived realities of family violence.

The challenges that victim survivors face when they are pursued for liability suggest that the recent reforms introduced to deter and penalise illegal phoenix activity could have the unintended consequence of escalating the harm they experience when they are coerced or defrauded into becoming straw directors.

The research proposes reforms to disrupt harm from economic abuse through liability as straw directors.