Company Directors' Duties

November 1989

ISBN 0 644 10716 2

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TABLE OF CONTENTS - (PDF format)
Terms of Reference
Recommendations
Abbreviations

Chapter 1: Background to the Inquiry- (PDF format)
Terms of reference
Advertising the inquiry
Focus of the inquiry
Public Hearings
New corporations legislation
Structure of the report

Chapter 2: Introduction - (PDF format)
The modern corporate sector
Where do directors' duties lie?
Wider duties
Multiple duties - much conflict?
Is there need for more regulation?
What sort of regulation?
What is the standard of directors' duties?
Close corportations
Sanctions
Summary

Chapter 3: Care, Skill and Dilligence - (PDF format)
Case law
Legislation
Section 229
Other specific provisions
The traditional duties summarised
The business judgment rule
Attendance at meetings
Figurehead directors
Delegation

Chapter 4: Directors' Fiduciary Duties - (PDF format)
The fiduciary's powers and discretions
Ratification
The interests of the company
Standards of conduct
Disclosure
Conflicts of interest and duty
Abuse of a position
Multiple directorships
Business oportunities
'Corporate opportunity' doctrine
Disclosure and consent
A continuing duty
The relationship of the companies legislation to equity
Conclusion

Chapter 5: Directors' Wider Duties - Creditors - (PDF format)
Introduction
Duties to creditors
Walker v Wimborne
Ring v Sutton
Nicholson v Permakraft
Kinsela v Russell Kinsela Pty Ltd
The effect of the cases
Should creditors be able to sue?
Statutory provisions
Intersection of fiduciary and statutory duties
Conclusion

Chapter 6: Directors' Wider Duties - Other 'Outside' Interests - (PDF format)
Employees
Gratuitous benefits
The English situation
Environmental Issues
Consumers
Reconciling different duties
Conclusion

Chapter 7: Internal Controls - (PDF format)
The board of directors
What is a director?
Representative directors
Executive vs non-executive directors
The composition of the board
Charitable and other non-profit companies
Directors vs auditors
The division of power between directors and shareholders
Shareholders and renounceable rights issues
Table 1: Average size and composititon of boards, 1988

Chapter 8: Audit Committess - (PDF format)
Corporate senates
Stakeholder councils

Chapter 9: Qualifications of Company Directors - (PDF format)
Horses for courses
Education and training directors
Statement of skills

Chapter 10: Enforcement - General -(PDF format)
Ethics
Enforcement fo the law
Australia's corporate regulatory system
National corportations legislation
Adequacy of enforcement
Actions by the NCSC

Chapter 11: Shareholder Remedies - (PDF format)
Minority shareholders
The rule in Foss v Harbottle
Derivative action (fraud on the minority)
Personal action
Rectification fo the register
Restraining acts ultra vires the company
'Where justice otherwise requires and exception'
The Australian attitude
Statutory remedies
The cost of litigating
Contigency fees
Obtaining information
Forgiveness of breaches of duty

Chapter 12: Directors' Personal Liability for Acts of the Company - (PDF format)
Corporate personality
Individual liability
Hamilton v Whithead
Allocation fo individual and corporate liability
Examples from other jurisdictions
Submissions
Indemnification
Individual liability may be appropriate
Development of policy
Relevant factors
Legal risk management

Chapter 13: Sanctions Against Directors - (PDF format)
Criminal sanctions
Decriminalisation of compay law
Civil remedies
Level of penalties
Community service orders
Disqualification

APPENDICES

Appendix 1: Individuals and organisations who made written submissions to the Committee - (PDF format)

Appendix2: Witnesses who appeared at public hearings - (PDF format)