Big Trends and Developments and their impact on Directors and Officers

Tuesday March 7, 2017

Juanita Rayson, Partner at DibbsBarker joined Fiona Lam of Legalwise Seminars to discuss disclosure issues, big trends and other developments for directors and officers.


Juanita is an experienced corporate advisory practitioner. She has acted for numerous listed and unlisted clients, spanning a wide range of industry sectors, on transactions including mergers & acquisitions, restructuring through demerger, capital raisings and associated due diligence investigations.

Juanita also regularly assists clients with corporate governance issues such as compliance with the Corporations Act and the ASX Listing Rules, as well as advising on director's duties, shareholder meetings and employee incentive plans.

You can hear from Juanita directly at the Director and Officer Duties: Do's and Don'ts on Tuesday 21 March at the Mercure Hotel Brisbane.

What do directors sometimes get wrong regarding disclosure issues?

Sometimes directors fail to comply with the requirement to disclose information “immediately”.  While this is not meant to be read as “instantaneous”, the Australian Securities Exchange (ASX) expects disclosure to occur promptly without delay.  If an entity is not in a position to make an announcement in a timely manner and the market will be trading on an uninformed basis, a trading halt should be requested from ASX.

While the speed at which disclosure can occur will depend on the circumstances, the Australian Securities and Investments Commission (ASIC) has issued infringement notices where the time delay between the obligation to disclose arising and the entity requesting a trading halt is very short (eg 70 minutes).

What might some directors and officers not realise or fully appreciate related to market announcements?

While a listed entity has the primary obligation to comply with the continuous disclosure requirements in ASX Listing Rule 3.1, there is also potential personal liability for directors and officers for breaches of the continuous disclosure regime.  On top of this, there is additional potential personal liability if a market announcement is found to be false or misleading.

If civil proceedings are brought against directors and officers and they are found to be personally liable, the consequences can be significant. Those consequences might involve the imposition of fines or compensation orders, as well as the issuance of banning orders.

What are some of the big trends and developments you see ahead that might impact directors and officers?

An emerging trend in the area of director and officer liability is the use of the “stepping stone approach”.  This approach, which was used by ASIC in ASIC v Padbury Mining Limited [2016] FCA 990, involves imposing liabilityon directors and officers in circumstances where the company has breached a provision of the Corporations Act2001 (Cth) and the directors failed to prevent that breach. 

In the Padbury Mining case, the company’s breaches of the continuous disclosure and misleading and deceptive conduct provisions of the Corporations Act were used to support allegations against two directors for breaches of their statutory duty to act with due care and diligence.

The stepping stone approach could extend to breaches of any law that a director fails to prevent.

You can hear from Juanita directly at the Director and Officer Duties: Do's and Don'ts on Tuesday 21 March at the Mercure Hotel Brisbane.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article.


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