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GFC and Hardie decision hit director's duties
The James Hardie decision has highlighted the focus on director's duties in the current economic climate, David Grace, partner at Cooper Grace Ward, told Lawyers Weekly following a breakfast…
Lawyers Weekly
The James Hardie decision has highlighted the focus on director's duties in the current economic climate, David Grace, partner at Cooper Grace Ward, told Lawyers Weekly following a breakfast seminar held at the firm on Tuesday.
"Director's duties haven't changed because the law hasn't changed in that regard," said Grace. "What [the Hardie decision] shows is, especially in difficult economic times, directors need to heighten their alertness to an understanding of what's happening to the company's business and to make sure they receive all relevant and adequate information and that they deal with it through proper decision making.
"In other words, directors have to be alert to the way in which the market impacts on the companies operations and make decisions with appropriate timing, to make sure that they do satisfy their obligations towards the company and its shareholders and creditors."
Monitoring and updating information about the company's financial position was also an important responsibility of directors, Grace said.
"Directors should ... be prepared to respond to rumours so that the markets are fully informed; to make a timely, clear, complete and accurate disclosure to the market and be conservative in deciding what information is material," Grace advised. "Don't go out on a limb and assume information is not material when in truth it may be.
"ASIC expects real risk disclosures, not disclaimers or disclosures of every possible risk. So, in other words, there's got to be a common sense approach to the assessment of what a real risk is."
- Sarah Sharples
