ASIC wins against James Hardie directors in the High Court
A University of Western Sydney corporate governance expert says two high court findings against James Hardie over a misleading statement regarding an asbestos victims’ compensation fund have raised the standard of care and diligence required by executive and non-executive directors and officers.
Professor Michael Adams, the Dean of the School of Law at UWS, has over 25 years corporate governance experience and research.
Professor Adams says the High Court found seven non-executive directors did breach their basic duty under section 180 – to act with due care and diligence – in approving the misleading media release to the ASX and thus the shareholders and public.
“It is hard to believe that a board meeting to approve a press release to the ASX on 15th February 2001 would lead to a breach of directors’ duties in May 2012 – over a decade later,” Professor Adams says.
“Unfortunately, the actual matters are not fully over, as the High Court of Australia has remitted certain matters back to the NSW Court of Appeal for further consideration, including the exclusion from liability, penalties and disqualifications. These are key aspects for understanding future responsibilities for all directors of Australia’s 1.9 million companies.”
Professor Adams says as well the High Court determining the non-executive directors (ASIC v Hellicar & others), it has also ruled on the executive director (Shafron v ASIC) Mr Peter Shafron, who was both company secretary and general counsel of James Hardie.
“Peter Shafron’s appeal was based upon the argument that his role as company secretary was distinct from that as general counsel, but the High Court has stated that the roles are indivisible and must be viewed as a composite whole. Thus, he was in breach of his duty of care,” he says.
3 May 2012