Our previous blog dated
30 September 2011 recorded the background to this case. The
Australian Securities and Investments Commission (ASIC) won at
first instance, arguing that the directors were responsible for the
wording of the relevant press release to the ASX which was held to
be misleading to the market. The directors successfully appealed
The High Court decision represents the highest legal judgment in
a decade long dispute in relation to directors' duties. Of
note, the decision affirms (amongst other things) the duties and
liabilities of directors and officers as prescribed by the
Corporations Act 2001 (Cth) (Act). For example, in
relation to section 180(1) of the Act, directors must ensure that
every step is taken to ensure the highest compliance with the
obligations to discharge their duties with a degree of care and
diligence that a reasonable person in their position and with their
responsibilities would exercise.
The decision also held that company secretary and general
counsel, Peter Shafron, failed to discharge his duties with care
and diligence in relation to the actuarial work that underpinned
the directors' misleading statement to the ASX. Accordingly, Mr
Shafron's appeal was dismissed by the High Court (see also Shafron
v Australian Securities and Investments Commission  HCA
Directors should take careful note of this decision especially
in relation to the high threshold of their duties for any market
disclosure/statements to the ASX. The High Court has referred the
matter back to the Court of Appeal to consider issues of liability,
penalty and disqualification. We will report on the Court of
Appeal's decision as soon as it is delivered.
This update was co-authored by DLA Piper Foreign Legal
Associate, Mark Dowsing
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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