AICD welcomes progress on review of directors liabilities

The Australian Institute of Company Directors (AICD) today welcomed the Government’s progress in reviewing the imposition of personal liability on company directors and the release of the Treasury survey on this issue.

In today’s announcement, Senator Nick Sherry, Minister for Superannuation and Corporate Law, highlighted that this area of corporations’ law reform is important to all Australians. Directors have a vital role in contributing to economic growth given their role in corporate decision-making.

AICD will await the release of the Ministerial Council for Corporations (MINCO) report in 2009, but the decisions from COAG to date indicate that the Government is working towards legislation that is fair, consistent and principled.

Chief Executive Officer of AICD, Mr John Colvin complimented the Government for its commitment to reviewing this issue, particularly given the current economic climate and community concern regarding the actions of some directors and corporations.

In referring to the need to “get the balance right”, AICD believes COAG and Minister Sherry have recognised company directors are not seeking a lowering of standards, and that positive regulatory change can be achieved without increased protection for those guilty of misconduct.

“We hope this process will provide clarification of director duties and defences and provide greater certainty to the majority of directors who do fulfil their duties diligently and ethically,” said Mr Colvin.

AICD notes MINCO will only examine criminal liability. AICD has previously advocated for a similar review of civil liability.

“This is a good start to addressing an immense regulatory burden on directors. There are more than 600 state laws that impose personal liability on directors,” said Mr Colvin.

“The regulatory burden is a disincentive to many would-be directors of our top corporations. In these difficult times, Australia desperately needs quality directors that can focus on driving business performance,” he said.

Mr Colvin also welcomed Minister Sherry’s release of the Treasury survey results.

“The survey results demonstrate concrete, quantitative data that validates the concerns AICD members have had for some time. Personal liability risks for directors can lead to overly cautious decision-making that has a detrimental impact on our economy,” Mr Colvin said.

For media inquiries, please contact:
Juliet Chandler, Communications Advisor, (02) 8248 6624
or 0412 580 402

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