director liability reform essential for benefit of australian economy

A Federal Government initiative to reform national and state laws relating to director’s liability was today welcomed by the Australian Institute of Company Directors (AICD).

“We have long been urging that the myriad of laws that impose differing obligations on directors should be rationalised,” said AICD’s chairman, Mr John Story.

“Our objective is simply a consistent statement of the duty of directors, which reflects realistically the role that they actually play. This should be applied uniformly across all Commonwealth and State acts and regulations.

“The current statement in the Corporations Act of the general duty of care for directors, which incorporates the business judgment rule, is a good starting point. It recognises the role of directors acting reasonably in the interests of shareholders, but provides no protection for those who fail to do so.

“This is not about letting bad directors avoid responsibility for their actions,” Mr Story said. “But boards undertake a vital function creating wealth in our economy, and the community understands the importance that this has to the accumulation of their own retirement savings.”

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