Evolving Directors’ Duties in the Common Law World

RESEARCH HANDBOOK ON DIRECTORS' DUTIES, A. Paolini, ed., Edward Elgar Publishing: Cheltenham, pp. 3-43, 2014

Sydney Law School Research Paper No. 13/17

ECGI - Law Working Paper No. 209

50 Pages Posted: 3 Apr 2013 Last revised: 20 Nov 2014

See all articles by Jennifer G. Hill

Jennifer G. Hill

Monash University Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: April 1, 2013

Abstract

Legal scholars have long discussed the gap, or “acoustic separation”, between stringent standards of conduct (“conduct rules”) and more lenient standards of review (“decision rules”) in legal regulation. This gap has been particularly stark in the United States in relation to directors’ duty of care.

The goal of this chapter is to explore a range of developments relating to directors’ duties across several common law jurisdictions, including the US, UK Australia and Canada against the backdrop of conduct and decision rules. For example, contemporary Australian case law on the duty of care and diligence, although highlighting the ongoing tension between conduct rules and decision rules, diverges from US law in many key respects. Also, under Australia’s regulatory model, the Australian Securities and Investments Commission (“ASIC”), the primary corporate regulator, operates as the main enforcement mechanism for breach of directors’ duties.

Finally, the chapter assesses some recent developments in the common law world on the perennial issue of to whom directors owe their duties, and the extent to which stakeholder interests can, or must, be taken into account in board decision-making.

Keywords: global financial crisis, corporate governance, directors, boards, monitoring, directors’ duties, directors’ liability, duty of care, business judgment rule, duty of oversight, James Hardie litigation, Centro litigation, financial disclosure

JEL Classification: G18, G28, G30, G32, G38, K20, K22, O16

Suggested Citation

Hill, Jennifer G., Evolving Directors’ Duties in the Common Law World (April 1, 2013). RESEARCH HANDBOOK ON DIRECTORS' DUTIES, A. Paolini, ed., Edward Elgar Publishing: Cheltenham, pp. 3-43, 2014; Sydney Law School Research Paper No. 13/17; ECGI - Law Working Paper No. 209. Available at SSRN: https://ssrn.com/abstract=2243187

Jennifer G. Hill (Contact Author)

Monash University Faculty of Law ( email )

Building 15
Clayton Campus
Melbourne, NSW 3800
Australia
+61 3 99053838 (Phone)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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