Statement from Company Directors on James Hardie judgment
- Date:03 May 2012
- Type:Media Release
Today’s High Court decision overturning a NSW Court of Appeal finding relating to seven directors of James Hardie Industries reminds all directors and boards of their duty to act with care and diligence, as well as the risks involved.
Continuous disclosure remains an extremely difficult area for listed companies and their boards, the Australian Institute of Company Directors said today.
Company Directors does not comment on the circumstances of individual directors or companies and, for this reason, we will not be commenting today on the specifics of this case or on the High Court decision. However, while we are continuing to review and analyse the full High Court judgment, we note the case has potentially wide implications for directors, company secretaries and general counsel, in the understanding of their duties and responsibilities.
“Board members should apply their individual, considered judgement to matters that are highly significant to the company, especially issues with market sensitivity and that involve ASX disclosure,” said John Colvin, Australian Institute of Company Directors CEO and Managing Director.
“The case again puts the spotlight on the area of continuous disclosure and places additional emphasis on the need for boards to carefully consider whether statements made in their company’s releases are appropriately qualified,” Mr Colvin said.
The case is expected to draw greater focus to board administration processes, such as the selection of agenda items, detail within board papers and minute-taking procedures and approval, which is likely to include increase the demands directors place on company secretaries and general counsels.
“The decision also reinforces the need for ongoing, quality director education. Directors must keep themselves up-to-date, generally and with the law. They should become familiar with this decision,” Mr Colvin said
“We will incorporate discussion of the judgment and its implications within our education activities for directors, where participants learn the theory, and discuss the practice, of directors’ legal duties and responsibilities,” he said.
More generally, Company Directors continues to be concerned that, in an environment where regulation and red-tape is increasing, the role of a company director is becoming increasingly onerous and this is having a detrimental impact on board recruitment and retention.
According to the findings of the Director Sentiment Index releases in April 2012, about 40 per cent of directors believe that legislation imposing liability on directors has a negative impact on their business decisions and their willingness to serve on a board.
About half of those directors surveyed also maintain that legal judgments such as in the James Hardie and Centro cases, have negatively affected their willingness to accept new board appointments.
Company Directors continues to review and analyse the full implications of the High Court decision for directors and corporate governance.
Download the above media release, 'Statement from Company Directors on James Hardie judgment' (PDF 116KB)
- Michelle Wood, Media and Government Relations Advisor, 0466 655 115
- Steve Burrell, General Manager, Communications and Public Affairs, 0407 708 485