The Australian Institute of Company Directors (AICD) has released a report today claiming that most states of Australia are placing an excessive liability burden on company directors, and consequently damaging business investment and jobs.
The AICD claims its Boardroom Burden Report Card measures the state-by-state "business-friendliness" of legal regimes and rates them according to the content of laws imposing liability on directors, the number of laws in operation in each state, and how they are administrated.
Only the ACT and Victoria passed the AICD test, while six other states and territories failed.
Queensland fared the worst, said the AICD, while South Australia, Western Australia and New South Wales also did poorly.
According to John Colvin, the CEO of AICD, the report card should carry a strong message for governments.
"Director liability issues affect business decision-making and can have an impact on where companies invest and create new jobs," he said.
"All state and territory governments should be looking to assess and reform their director liability laws, along the lines already agreed by the Council of Australian Governments (COAG).
Colvin added that all states need a first rate corporate governance legislative regime. "The state's record in this area is very poor, with little thought to the long-term effects of not dealing with the issue."