Vol 7 Issue 16 August 26 2009

  • Date:26 Aug 2009
  • Type:Boardroom Report

CAMAC to review director responsibility guidance

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, has asked the Corporations and Markets Advisory Committee (CAMAC), to examine what guidance is necessary for directors to fully understand the responsibilities of their roles.

In his request, Bowen said he was particularly interested in what support could be provided to increase the engagement of nonexecutive directors (NEDs) with their position on the board and bring an independent and broad view to board decision-making.

The rising workload of NEDs

Attracting highly experienced and competent non-executive directors (NEDs) is likely to become more difficult if trends indentified in recent research by Guerdon Associates continue.

Towards better boardroom diversity

Boards should take a more open approach to board selection and regularly review their composition as part of a formal process of evaluating their effectiveness.

This is one of the many recommendations strongly endorsed by AICD and contained in the report, Diversity on boards of directors, recently released by the Corporations and Markets Advisory Committee (CAMAC).

Hardie lessons for directors

All directors and boards have a responsibility at law to take car and be diligent in their decision-making, regardless of their company circumstances.

That’s the comment from AICD CEO John Colvin following the NSW Supreme Court’s recent decision on penalties for 10 former directors of James Hardie Industries Limited (JHIL).

“Board members should apply their individual, considered judgement to matters that are highly significant to the company, especially issues of market sensitivity, and with potential legal implications,” he says.

Surprises on the upside

Finally, there has been some good news this reporting season - more companies are reporting better than expected earnings and the average fall in profits is less than expected.

Shane Oliver, head of Investment Strategy and chief economist at AMP Capital Investors, says: “Company profits will probably be down by around 18 per cent for the past financial year – the worst outcome since 1991 – but prior to the results starting to flow through a few weeks ago, the market consensus was for a fall of about 23 per cent. And, while there have been some disappointments, this is the best reporting season in three years in terms of companies reporting better than expected results.”

 

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