Various laws impose personal liability on Directors and Managers of companies for offences that arecommitted by the company. The Miscellaneous Acts Amendment (Directors) Liability Act, 2011 has altered the extent of the Director’s liability. The laws in each state are being changed at the same time so as to bring them all into line and create a standard rule across the states. The three (3) principles that underpin the reforms are:-
- In the first instance it is the company which is the entity that should be held liable where some law has been broken, and
- The Directors should not be liable for corporate fault as a matter of course or by the blanket imposition of liability, and
- There would need to be some compelling public policy reason for a Director to generally now be held personally liable for a company’s wrongdoing – for example, the potential for public harm.
The overall effect is to lessen the obligation potentially imposed on Directors. In related changes the Employment Laws have been changed so that the duty of a Director to ensure the health, safety and welfare of the company’s employees is now described as being a duty to take all steps “reasonably practicable” to ensure their safety, etc. Officers of a corporation under the new laws are required to exercise “due diligence” to ensure the corporation complies with work, health and safety duties whereas in the past the officers could have been strictly liable no matter what steps they took to deal with the situation.