Personal Liability for Corporate Fault Reform Bill 2012

  • Date:30 Mar 2012
  • Type:Policy Submission
This submission is in response to the Australian Government’s Exposure Draft of the Personal Liability for Corporate Fault Reform Bill 2012 (C’th)(the Draft Bill).

The Australian Institute of Company Directors has closely monitored the progress of the current COAG reform agenda set out in the National Partnership to Deliver a Seamless National Economy and in particular, the reform stream relating to director liability.  As part of this process we have been involved in discussions with the COAG BRCWG and State and Federal Government Ministers, regarding ways to deliver effective reform and appropriate legislative amendments in this area.

It is against this background that we respond to Treasury’s request for comments. In summary, our comments on the Exposure Draft included:

(a) The Draft Bill sets out minor amendments to provisions imposing personal criminal liability on directors in legislation contained in the Federal Treasury portfolio;

(b) The provisions which impose the most egregious personal criminal liability upon directors in Australia are not contained in legislation within the Federal Treasury portfolio;

(c) The Corporations Act 2001 (C’th) sets out the duties and responsibilities of directors and is arguably the only piece of legislation in Australia that should contain provisions imposing personal liability on directors;

(d) Outside of the Corporations Act, we are of the view that the principles formulated by the Australian Institute of Company Directors should be used to determine whether provisions imposing personal criminal liability on directors are appropriate;

(e) In circumstances where provisions imposing personal criminal liability on directors are determined to be appropriate, the Australian Institute of Company Directors model provision should be inserted to ensure consistency across State and Federal legislation; and

(f) The application of the Australian Institute of Company Directors principles and model provision avoids the inconsistent outcomes that have occurred as a result of the COAG process.

Download our submission in response to the Exposure Draft, Personal Liability for Corporate Fault Reform Bill 2012 (PDF 9MB)