Statutory Duties and Ratification: Untangling the Maze

Abstract

This article probes the apparent incoherence created by the fact that breach of the statutory directors’ duties in the Corporations Act 2001 (Cth) cannot be ratified or authorised by shareholders. This was recently affirmed by the Full Federal Court in Cassimatis v Australian Securities and Investments Commission (the Storm Financial case). This contrasts with the equivalent general law duties, breach of which can be ratified or authorised, subject to important limitations. This contrast also raises the issue of the ‘publicness’ of the statutory directors’ duties, which also came to the fore in the Cassimatis litigation. The article argues that the incongruity is not as significant as it first appears and stems to a large extent from Australia’s unique corporate law enforcement regime.

Keywords: directors' duties, fiduciary duties, company law, ratification, Companies Act 2006 (UK), Corporations Act 2001 (Cth), regulation

JEL Classification: K10, K20