Directors' responsibilities: The reality vs the myths
A speech by ASIC Chairman Jeffrey Lucy to the Australian Institute of Company Directors, 17 August 2006, Melbourne.
- Directors are expected to meet an increasing range of obligations amidst commercial and legal expectations of their actions.
- All of us are fully aware that your responsibilities as directors extend well beyond legal duties alone.
- The legal obligations imposed on directors underpin good corporate governance practices.
- However, these need to be balanced with commercial realities so that directors can make good business decisions and, as a result, drive the maintenance of reputable Australian financial markets.
- Meeting both commercial and legal expectations impacts more broadly on the rights and interests of stakeholders, which include, but are not limited to, shareholders.
- Your conscientious approach to obligations and duties as directors extend to both the commercial and legal perspectives.
- As the corporate regulator, ASIC takes your obligations seriously. We are responsible for enforcing the laws of the Commonwealth, which include directors' duties in the Corporations Act, but we are also responsible for facilitating the performance of the financial system and entities within it, as well as promoting the confident and informed participation of investors and consumers in that system.
- Today, I would like to discuss:
- the dynamic regulatory environment in which you need to fulfil your responsibilities as directors, including the commercial expectations placed upon you in this environment;
- ASIC's regulatory approach in relation to the legal obligations of directors; and
- the need for you to stay abreast of current and future developments to continue to properly meet your responsibilities as directors.