The Origins of Company Directors' Statutory Duty of Care

Sydney Law Review, Vol. 37, No. 4, 489-518, 2015

30 Pages Posted: 15 Dec 2015

See all articles by Rosemary Teele Langford

Rosemary Teele Langford

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Michelle Anne Welsh

Monash Business School

Date Written: December 15, 2015

Abstract

The authors investigate the origins of company directors’ statutory duty of care. The findings of their archival research include that, contrary to what is said in some court judgments and corporate law commentaries, the first statutory duty of care in Australia, and arguably the common law world, was introduced in the State of Victoria in the Companies Act 1896 (Vic). A later version of the duty, in the Companies Act 1958 (Vic), introduced public enforcement of the duty. Although the implications of this development may not have been appreciated by those participating in the debates regarding the introduction of the 1958 Act, the authors show, through discussion of recent cases involving the statutory duty of care, how the Australian Securities and Investments Commission (ASIC) is now influencing governance standards in Australian boardrooms through the litigation it commences. ASIC is not only an active plaintiff in cases based on the statutory duty of care — using it more than private plaintiffs — but it also typically pursues a public interest agenda in these cases in terms of the remedies it seeks against defendant directors.

Keywords: directors' duties, duty of care, corporate law

Suggested Citation

Langford, Rosemary Teele and Ramsay, Ian and Welsh, Michelle Anne, The Origins of Company Directors' Statutory Duty of Care (December 15, 2015). Sydney Law Review, Vol. 37, No. 4, 489-518, 2015, Available at SSRN: https://ssrn.com/abstract=2703690

Rosemary Teele Langford

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Michelle Anne Welsh

Monash Business School ( email )

Wellington Road
Clayton, Victoria 3168
Australia

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