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Lawyer demands reform in the face of class actions

Lawyer demands reform in the face of class actions

Freehills’ own Bob Baxt has launched a timely book on the increasingly complex role of the company director, just as those same themes are raised in the James Hardie judgement.

Freehills’ own Bob Baxt has launched a timely book on the increasingly complex role of the company director, just as those same themes are raised in the James Hardie judgement.

In the updated version of his book, Duties and Responsibilities of Directors and Officers, Baxt sets out to show how the role of a company director is becoming increasingly complex as new laws are introduced, class actions are on the rise and the activity of regulators increases.

Professor Baxt says the book deals with legal minefields for directors, but argues governments need to focus on real reform in this area.

“Continuing to draft strict liability provisions into legislation or provisions which reverse the onus of proof against directors is fundamentally obnoxious.”

“On top of this, the growth of class actions and results in cases where shareholders/ members have been able to sue directors and companies is another cause for concern,” he said.

“The rise in class actions has been assisted by recent court decisions and the lack of appropriate regulation for professional litigation funders. This results in increased costs to the public by way of higher consumer prices, a reduction in shareholder value and decreased tax revenue as profits decline,” said Professor Baxt.

“Recent comments by ASIC that shareholder class actions are an appropriate market driven response are, in my view, to be tempered by the need to ensure that we have proper regulation in this area. Without that such actions can become a very unruly horse.”

Professor Baxt said that recent court cases such as CentroJames Hardie and Fortescue have made it difficult for directors to navigate their role without fear of being held personally liable.

“There seems to be a never-ending raft of legislation imposing personal liability on directors. With approximately 700 State and Territory laws making directors liable, it is little wonder that organisations across the country are being hampered by less than optimal decision making,” said Professor Baxt.

At the book’s launch late last week, chief executive officer and managing director of the Australian Institute of Company Directors, John Colvin, said it provides directors and officers with critical guidance at a time when director’s actions are under increasing scrutiny and reform is the subject of debate.

“In our most recent Director Sentiment Index survey, most directors said that current governance regulations under the Corporations Act are onerous,” said Colvin.

“Continuous piecemeal changes to legislation such as the Corporations Act can lead to errors and the need for ongoing amendments. It is difficult for directors, corporations and others to stay up-to-date.”

Colvin recommended every director read the book.


The book, first published in 1982, is a foundation resource for legal students, academics and practicing directors. It is also a critical element of Company Directors’ portfolio of resources designed to ensure directors’ knowledge is current.


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