Do directors need better statutory protection when acting on the advice of others?

Article


Byrne, Mark. 2008. "Do directors need better statutory protection when acting on the advice of others?" Australian Journal of Corporate Law. 21 (3), pp. 238-257.
Article Title

Do directors need better statutory protection when acting on the advice of others?

ERA Journal ID37186
Article CategoryArticle
Authors
AuthorByrne, Mark
Journal TitleAustralian Journal of Corporate Law
Journal Citation21 (3), pp. 238-257
Number of Pages20
Year2008
Place of PublicationSydney, Australia
ISSN1037-4124
Web Address (URL)http://www.lexisnexis.com/au/legal/results/docview/docview.do?docLinkInd=true&risb=21_T3639553684&format=GNBFULL&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T3639553687&cisb=22_T3639553686&treeMax=true&treeWidth=0&csi=267866&docNo=1
Abstract

There is a practical need for company directors to rely on advice and information supplied by others. Theory suggests this is also a most efficient practice that should be encouraged and supported. Failure to do so arguably raises the cost of corporate governance and affects directors' actions because of the risk of personal liability. When the common law caused the process of delegation and reliance to become problematic, amendments were introduced to the Corporations Act to better protect the practice. This article suggests however that these provisions now actually make the directors' position more difficult. Ironically they impose more stringent requirements than would have ever been intended. There are currently proposals to review these provisions and others to provide better protection
for directors. It is argued however that those proposals would not adequately address the matters raised in the most recent authorities. There is a need for better clarity of principle and process on this issue. This article suggests a way forward that should be designed around more practical considerations and efficiencies.

Keywordscompany directors; statutory protection; advice
ANZSRC Field of Research 2020480103. Corporations and associations law
500102. Business ethics
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Byline AffiliationsSchool of Law
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