AICD believes there is "excessive" liability burden imposed on...

AICD believes there is "excessive" liability burden imposed on company directors. Are Crosby, Nosworthy and Ward members of the AICD? Has AICD heard about what happened to Ventracor? Hmmm...


Australia’s heavy liability burden

Angela Kean
Tuesday, 29 September 2009

BUSINESS investment and jobs could be hard hit in Australia with the “excessive” liability burden imposed on company directors in most states, a new business report card has found.


The Australian Institute of Company Directors Boardroom Burden Report Card measures the “business friendliness” of current liability laws imposed on directors in each state and territory, taking into account content, number of laws in operation and the procedural fairness with which they are administered.

The report card shows that only the Australian Capital Territory and Victoria received better than a pass mark, while the remaining six states and territories failed.

Queensland had the worst result, with just 18.23%. South Australia, Western Australia and New South Wales also did poorly, all falling well short of a pass mark.

Western Australia rated poorly because of its 141 laws imposing liability on directors; however, NSW, Queensland and South Australia also had more than100 pieces of legislation of this type.

AICD chief executive John Colvin said the new report card should serve as a “strong message” for governments to reform director liability laws.

“The states’ record in this area is very poor, with little thought to the long-term effects of not dealing with the issue,” he said.

“Director liability issues affect business decision-making and can have an impact on where companies invest and create new jobs.

“They need to stop stalling and get on with it – they are failing the test on director liability and failing the Australian economy.”

There are 663 state and territory laws which impose personal liability on individual directors for corporate misconduct.

According to the AICD, the burden of legal risk being confronted by Australian directors is making many qualified people shy away from taking up board seats and causing others to get out, through resignation or premature retirement.

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