The law firm has released Directions 2012, a report examining the current issues and challenges facing Australian directors and boards.

The firm asked directors in more than 300 organisations across a range of sectors, which regulatory changes of 2011 most impacted them.

More than 51 per cent of respondents included directors’ duties and the implications of decisions such as Centro and James Hardie in their top three.

This was followed by the carbon emissions policies and carbon tax, as well as executive and director remuneration, which were the in the top three issues for more than 40 per cent of respondents.

Carbon emissions policies and carbon tax was also the issue ranked as the top issue by the most directors, with 20 per cent citing it as their number one focus.

Changes to the occupational health and safety laws also ranked high for directors, 36 per cent of who cited it as a top three issue.

Mallesons said the volume of regulatory reform is creating issues for the country’s business leaders.

“The volume and populist focus of regulatory reform is creating frustration and uncertainty for corporate Australia,” said Nicola Charlston, partner of Mallesons and co-author of the report. 

The survey results demonstrate that directors are currently required to devote substantial amounts of time to regulatory and compliance matters. 

“This raises the key question of whether the time that boards and directors are now required to devote to regulatory and compliance matters is detracting too significantly (and detrimentally) from the time that would otherwise be available for them to pursue their traditional role – the oversight of the strategic direction and management of the company,” said Meredith Paynter, partner of Mallesons and co-author of the report.

Directors were asked to indicate how many hours they had spent during the past year dealing with the issue they identified as their top ranked regulatory issue. 37.6 per cent spent over 30 hours on that issue alone, more than 60 per cent had spent in excess of 20 hours and for nearly 85 per cent it was more than 10 hours. 

The report estimates that industrial relations reform will be a significant issue in 2012.  

“Directors are calling for IR reform to improve Australia’s competitiveness, which is particularly important at the moment given the current global and domestic economic issues”, said Charlston.

More generally, uncertainty regarding the direction and expected outcomes of reform proposals is expected to remain an ongoing source of frustration for companies and boards in 2012. 

It will therefore be important for government and business to work together to develop new laws and regulation, and in some cases reform existing laws and regulation.  This should contribute to improved productivity, wealth creation and appropriate management and governance practices. 

“What we need is smarter regulation and a more rigorous cost/benefit analysis to be undertaken before and after reforms are implemented,” said Paynter.