Corporate Culpability, Stepping Stones and Mariner - Contention Surrounding Directors' Duties Where the Company Breaches the Law
(2016) 34 Company & Securities Law Journal 75
6 Pages Posted: 5 May 2016
Date Written: February 2, 2016
Against a background examination of the policy considerations relevant to the imposition of liability on directors and officers in circumstances where a company breaches the law, this paper hones in on the so-called ‘stepping stones’ approach. This approach, highlighted by Herzberg and Anderson, involves the imposition of liability on directors for breach of the duty of care (and also in some cases for breach of the duty to act in good faith in the interests of the company and potentially the duty to avoid improper use of position) in exposing the company to the risk of prosecution or liability where action is taken against the company for breach of the Corporations Act 2001 (Cth) or some other law. The paper draws attention to the restrained application of the stepping stones approach in the 2015 case of Australian Securities and Investments Commission v Mariner (2015) 106 ACSR 343 and assesses this application in light of previous cases and commentary on the stepping stones approach. It provides comparative analysis of other jurisdictions, demonstrating the uniqueness of the stepping stones approach and of the absence of the illegality defence in Australia. In outlining the sources of liability imposed on directors and officers, the paper also comments on the proposed introduction by the Australian Securities and Investments Commission of liability based on corporate culture.
Keywords: directors' duties, fiduciary duties, stepping stones, corporate culture
JEL Classification: K22
Suggested Citation: Suggested Citation