GLG News by Energy / Utilities Experts: Legal, Economic, and Regulatory Affairs (Australia)

Rachel LaundersPartnerGILBERT AND TOBIN

ASIC v. James Hardie - the spotlight on company directors and senior management

June 2, 2009

Analysis of:James Hardie proceedings | www.asic.gov.au

Directors in Australian listed companies may be nervous about the duty of care which they owe to the company, following the decision in ASIC v. James Hardie (April 2009). The Court found that they have a duty to avoid exposing the company to risk of harm to reputation or legal claims. Senior executives, including the General Counsel, also came under the spotlight, being found in breach of their duties for failing to warn the board of the risks which the company was being exposed to. The case is also a reminder that companies need to take particular care with public announcements - the desire to promote the good news cannot overtake the need for an announcement which is balanced, objective, complete and accurate.

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