Grace said that Bruce Dodd, regional commissioner for Western Australia at the Australian Securities and Investments Commission (ASIC), spoke at the seminar about the Hardie decision, which has emphasised that courts are examining how directors carry out their duties, with breaches resulting in serious consequences.

"Director's duties haven't changed because the law hasn't changed in that regard," said Grace. "What [the Hardie decision] shows is, especially in difficult economic times, directors need to heighten their alertness to an understanding of what's happening to the company's business and to make sure they receive all relevant and adequate information and that they deal with it through proper decision making.

"In other words, directors have to be alert to the way in which the market impacts on the companies operations and make decisions with appropriate timing, to make sure that they do satisfy their obligations towards the company and its shareholders and creditors."

Monitoring and updating information about the company's financial position was also an important responsibility of directors, Grace said.

"Directors should ... be prepared to respond to rumours so that the markets are fully informed; to make a timely, clear, complete and accurate disclosure to the market and be conservative in deciding what information is material," Grace advised. "Don't go out on a limb and assume information is not material when in truth it may be.

"ASIC expects real risk disclosures, not disclaimers or disclosures of every possible risk. So, in other words, there's got to be a common sense approach to the assessment of what a real risk is."

- Sarah Sharples