According to Australia’s The Age, structures on company boards are being reviewed to determine whether personal liability laws in Australia are due for reform. Corporate law Professor Jean du Plessis at Deakin University sat down with corporate governance experts as well as senior Australian Treasury officials last year.
While du Plessis welcomed the idea of a reviewing the “business judgment rule,” his feeling after attending last year’s discussion was that there are no big issues concerning personal liability laws in Australia to warrant any expedited change.
Despite the lack of urgency to reform the rule, the Australian Institute of Company Directors said Monday, that the next best step would be to extend the “business judgment rule.” AICD chairman John Story said, “This recognizes the role of directors acting reasonably in the interests of shareholders, but provides no protection for those who fail to do so.” Story further stated that numerous laws need to be reevaluated because reforming current laws could reduce compliance costs, cut insurance premiums and make Australia more attractive to foreign investors.
The Australian Shareholders Association chairman Ian Curry said that directors were properly compensated for personal liability risks. Curry said, “”I would have thought that the existing arrangements are appropriate.” The ASA estimates directors of the top 200 companies are paid about $120,000 a year. Chairmen usually receive double that.
Corporate Governance Minister Nick Sherry said the 600 company directors surveyed was only the beginning of research findings. Further review by the ASA and corporate governance experts will be necessary to make any adjustments to extend or redefine the current “business judgment rule.”