Reform of directors’ personal liability for corporate fault

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Reform of directors’ personal liability for corporate fault

National guidelines to rationalise criminal liability of directors and officers for a range of corporate offences are being implemented in New South Wales.

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National guidelines to rationalise criminal liability of directors and officers for a range of corporate offences are being implemented in New South Wales.

The guidelines were approved by COAG (on 25 July 2012), as part of the implementation of the National Partnership Agreement to Deliver a Seamless National Economy
 
The problem
 
Provisions that impose criminal liability on directors and officers for corporate offences in circumstances beyond normal criminal law principles of accessorial liability have proliferated inconsistently and without clear justification over many years, according to the NSW Government:
‘This has created undue complexity, a lack of clarity about responsibilities, and unnecessary regulatory burden.’
COAG guidelines
 
The COAG guidelines provide a policy framework describing the different types of directors’ liability provisions that may be used in legislation and setting out the policy criteria that must be considered before any directors’ liability provision is applied.

NSW provisions
 
Ministers are to ensure the guidelines are applied in the development and drafting of all new legislation in New South Wales.

Where, having applied the guidelines, it is considered that a directors’ liability provision may be justified for inclusion in any proposed legislation, Parliamentary Counsel is to refer the proposed provision to the Department of Premier and Cabinet for advice.

The legislation (Miscellaneous Acts Amendment (Directors’ Liability) Bill 2012 (NSW) is currently progressing through NSW Parliament.

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