Directors' personal liability-is the proposed amendment to Section 197 acceptable when compared with Hanel v O'Neill?

On 2 June 2005, the Australian Government announced a proposal to amend s. 197 of the Corporations Act. This is to overturn the decision in Hanel v. O'Neill ("Hanel") where the South Australian Supreme Court has expanded the circumstances in which directors of trustee companies can be held personally liable for the debts under the current section 197(1) of the Corporations Act 2001 (Cth). The multiple interpretations presented in Hanel highlighted the uncertainty of s. 197 and this uncertainty is heightened in at least two subsequent cases. The article provides a detailed analysis of how the decision in Hanel is affecting the directors' freedom of management and suggests some precautionary measures that the directors could take as protection against creditor's actions under s. 197. The author welcomes the proposed amendment because the new section will create certainty for directors as to. the scope of their potential personal liability, but contends that the substance of the proposed s. 197 is not acceptable as there is potential for abuse by directors of certain trustee companies.

Removal of directors of public companies takes centre stage in Australia : an exploration of the corporate law and governance issues

Increasing attention is being given to the legal and governance issues relating to the removal of directors in Australian public companies. This has been due mainly to the difficulties experienced by the board of National Australia Bank in attempting to remove one of its fellow directors, and the subsequent development of public companies entering into so-called 'prenuptial agreements' with new directors, requiring that the director 'resign' if the board pass a vote of no-confidence in the director. In this article, the author revisits the area of director removal in Australian public companies for two reasons. The first reason, which covers the majority of the article, is to engage in a detailed analysis of whether the pre-nuptial agreements which some public companies have indicated that they support using to remove directors, are in fact enforceable under Australia's Corporations Act The second reason is to outline a law reform proposal to enable public companies to remove directors without requiring the vote of shareholders at a general meeting. The proposal involves providing Australia' corporate  regulator, the Australian Securities and Investments Commission (ASIC) with the power to grant relief from the statutory removal provisions to public companies, but in a way which balances the competing objectives of commercial efficiency and shareholder participation and, very importantly, encourages good corporate governance practices by companies in relation to the performance assessment  of directors.

It is in the interests of both shareholders and directors to agree on a set of ground rules for the effective supervision of companies that reconciles the rights of the owners to overall control with the much tougher demands on modern directors

Directors' duties to stakeholders : a reform proposal based on three false assumptions

The Corporations and Markets Advisory Committee has been asked to consider whether the duties of directors under the Corporations Act 2001 (Cth) should be broadened to require directors to take into account the interests of stakeholder groups other than shareholders when making corporate decisions. In this article, the author argues that the existing statutory duties of directors in Australia should remain unchanged. The existing duties of directors, in particular the overriding duty of directors to act in the best interests of the company, already accommodates consideration of stakeholder interests by directors if the decision is justifiable as being in the company's best interests. Furthermore, corporate culture and norms are moving towards embracing stakeholder engagement, again with the implicit recognition that integrating stakeholder considerations within the decision-making processes of companies is integral to achieving long-term sustainable growth.

Council amalgamations and restructuring in Victoria: how did we value the assets and liabilities?

This study aimed to identify and critically analyse the methodologies and accounting treatments adopted in the transfer of assets, liabilities, revenues and expenses resultingfrom municipal boundary changes associated with municipal restructuring (amalgamations) in Victoria during the early 1990s. In involved the collection and use of oral evidence obtained from officers of a sample of entities engaged in the process and focused on identifying and examining the methodologies used by municipalities. It has also been shown that local government is different from the commercial domain and the accounting profession has not adequately addressed some of these differences.

Accounting for local government boundary changes in South Australia : valuing assets and liabilities or valuing revenue streams

This paper examines the methodologies adopted in the transfer of assets, liabilities, revenues and expenses resulting from boundary changes associated with municipal amalgamations in South Australia during the late 1990s. It investigates the methods employed for apportioning these financial elements, valuations used and financial settlements required. Significant transfers occurred in only three cases. In two cases, councils used simple, pragmatic methods to apportion assets and liabilities, similar to those used previously in Victoria. In the third case a transfer price was calculated based on the net present value of revenues. This method is quite different from previous methods examined and is appropriate where one council will make significant future gains at another council's loss because of net revenue transfers.

Stakeholder and gender characteristics of mining and energy IPO boards of directors

The mining and energy sectors are particularly publicly sensitive sectors and subject to a high degree of public scrutiny. Evan and Freeman (1993) suggest that such public scrutiny needs may be better met by having direct public stakeholder representation on the board of directors. Similarly, Bilimoria (2000) argues a strong commercial case for engaging women on boards. This paper investigates the number and proportion of non equity holding public stakeholder directors and the number and proportion of women directors on the boards of Australian mining and energy company initial public offerings (IPOs) and reports a paucity of public stakeholder directors and also a low proportional female representation on such IPO boards.

Do MBA degrees matter? A study of boards of directors in Australia's top 200 companies

Pfeffer and Fong (2002) suggest that “business school enrolments have soared and business education has become a big business”. The Master of Business Administration (MBA) degree has often been held out to be useful in the career development of managers. The highest level that managers can aspire to, is to be a director of a large public company. This study investigates how many directors within the boards of Australia’s top 200 companies by market capitalization hold an MBA degree. We find that larger companies have proportionally more MBA holding directors than smaller companies. Interestingly we also find that proportionally more women hold MBAs than men; nearly one in five women directors hold an MBA within the top 200 companies dataset.

The stakeholder debate and directors' fiduciary duties

It is usually said that a company is a legal entity separate from its management and shareholders and that the business and affairs of a company must be managed by or under the direction of its board. This implies various duties and responsibilities for directors.<br>Directors' duties traditionally include onerous fiduciary duties and obligations of care, skill and diligence in terms of the common law, various statutory provisions in the Companies Act 61 of 1973 requiring certain things of directors or preventing them from doing certain things (see, eg, ss 221-227 and 234-246 of the Act), and possible duties imposed by the articles of association or even separate agreements between directors and their companies.

Directors' remuneration and performance in Australian banking

This paper explores the relationship between directors' pay and performance within Australian banking, using panel data for the 1992-2005 period. The relationship between CEO pay and performance is investigated also. Several earnings models are estimated, using different dependent variables, alternate measures of performance and different estimation techniques. The results indicate an absence of a contemporaneous relationship between directors' pay and bank performance, and no association with prior year performance. However, there is a more distant pay-performance relationship, with total directors' pay having a robust positive association with earnings per share lagged two years, as well as with ROE lagged two years. The other key determinants of directors' pay in Australian banking are bank specific managerial policies, lags in the administration of pay, bank size, directors' age and directors' stock ownership. In contrast to total directors' pay, the evidence confirms a strong positive and direct association between CEO remuneration and prior year bank performance. The pay-performance association is stronger and more direct for CEO remuneration than it is for total directors' remuneration. The responsiveness of CEO pay with respect to bank performance appears to have increased over time.

Attachments between directors and auditors: do they affect engagement tenure?

Auditors and directors may develop personal attachments over time based on trust and familiarity, and these personal ties seem important for the maintenance of long-term auditor-client relationships. This study examines the tenure of the audit engagement in the presence of these links, which is expected to be longer than auditor-client relationships not so linked. Results indicate director-auditor links are positively associated with auditor tenure and the retention of auditors beyond the critical four-year period identified by Levinthal and Fichman (1988).

Directors' remuneration and performance in the Australian banking sector

This paper explores the links between directors' pay and performance within the Australian banking sector using panel data for the 1993-2004 period. The links between CEOs' pay and performance is investigated also. Several earnings models are estimated and different estimation techniques are used. The results indicate that there is no link between directors' pay and firm performance with a one year lag. However, there is a more distant payperformance link, with directors' pay influenced by shareholders' returns with a three year lag. The other key determinants of directors' pay in the Australian banking sector are bank specific managerial policies, lags in the administration of pay, bank size and board composition. A clear and strong positive and direct association between CEO remuneration and performance is established.

Translating text into motion : performance analysis for singers and directors

The study proposes a method of interpretation, which gives the contemporary singer-actor and director a method of performance analysis considering both the visual and the auditory aspects of vocal performance. The analysis begins with an analysis of the structure, which maps out the key ideas and translates them into main states of mind. The text analysis is followed by an analysis of the musical treatment of the text, also scanning for extra dramatic meaning inherent in vocal line and musical accompaniment. The so isolated dramatic ideas in text and musical structure and content are finally discussed in terms of their physical aspects, using the system of gesture as practiced by actors and singers before, during and beyond the Baroque period. The method is exemplified by the obbligato recitative "In quali eccessi" from Donna Elvira’s scene in the second act of the opera "Don Giovanni" by L. Da Ponte and W. A. Mozart. The musical example includes gestural notation and a table gestural notation symbols.

Board directors and conflict of interest : a study of a sport league

Conflict of interest is one aspect of governance that has the potential to damage both an organisation and those who govern that organisation. Board directors of sport organisations are faced with a number of influences particular to sport business, which can impact on the process of managing conflict of interest. This research identified processes and attributes that influence directors: selection processes, outside roles, experience, regulation, education, motivation and qualifications. Directors and CEOs drawn from a sample of five Australian Football League (AFL) clubs and members of the AFL commission were interviewed. Data analysis was undertaken using a constructivist grounded theory method, and key processes (selection processes and director education) and attributes (outside roles, experience, regulation, motivation and qualifications) of non-executive directors were identified. By better understanding the influences on board directors in sport organisations, and the impact of these on managing conflict of interest, the potential for damage to the directors and the organisation may be decreased.

The curious case of the Occidental and Regal : the evolution of solvency and disclosure standards in the Australian life insurance industry

In 1990, the Australian life insurance industry was rocked by a scandal that threatened to destabilize consumer confidence in the ability of insurance providers to meet policyholder liabilities. The incident highlighted the nature of the agency problems that arise when conditions of asymmetric information exist. It revealed systemic weaknesses in accounting, solvency and disclosure standards as they applied to life insurers. This article uses an evolutionary concept of agency to analyse government and industry responses to this event. It is argued that initial adaptive responses stabilized the industry and averted a more serious crisis. Longer term innovative responses led to the introduction of a new and more rigorous approach to reporting and solvency standards, which has improved information flows and agency outcomes.