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James Hardie: more responsibilities
April 27, 2009, 8:35 pm
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Mulling over the latest James Hardie decision, by Gzell J in the Supreme Court of NSW last week.

The big deal is over releases made to the ASX in 2001, stating that James Hardie Industries would have enough funds available to pay compensation to asbestos victims. (If I’m not mistaken, the case was brought by ASIC following a recommendation in 2004 that they take this angle instead of trying to overturn limited liability.) As it turned out, they didn’t – a matter complicated by their use of partly-paid shares and creating new corporations to shift funds within their corporate structure.

When asked whether they had approved the release, or were aware of the financial situation at the time, selective amnesia spread through the directors like chicken pox through a Grade Two class.

The unfortunate covergirl of the decision is Meredith Hellicar – in part because of her resignation from Amalgamated Holdings following the decision, and in part because of the doubts cast over her character after some interesting contradictions in her evidence. (Also the only female defendant out of 11, but who’s checking?)

However, the another focus came through in the media; should directors be expected to be a new class of super-diligent human?

We do have greater expectations of those that run the country and companies, because they’ve put their hand up as being fit to do their duty. But how far should it go? The reason why companies have employees is that there is simply too much work and too much specialisation required for one person – or a small group of persons such as a board of directors, for that matter.

  • So to what extent can they be held responsible for the actions of the people actually doing the work?
  • Should they have to check all information instead of relying on the people who specialise in the area?
  • Should directors be expected to read every word of every email that comes through their inbox, on top of running a company and fulfiling other duties in their life? (I know I have enough problems balancing law readings and Facebook, and I’m ashamed to say which usually wins.)

For me this touches on a larger issue. After studying corporate law for twelve weeks straight and knowing how to find and interpret the relevant legislation and cases, I can tell you roughly where the law stands on each of those questions. But for those with no legal education, how can they ensure they’re following the law short of having a lawyer with them at every turn?

And it’s not just directors; as inhabitants of Australia we have a duty to follow its laws…

How can the public follow the law when it takes 4 years of study to learn what it is and what it means (and even then you don’t know all of it)?


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