Law Case Study
1. MAJOR LEGAL ISSUES
Duties under section 180(1) of the Act attach not only to directors but to officers more broadly (directors, company secretaries and certain others). The NSW Court of Appeal found that Mr Shafron was an officer on two distinct bases. Firstly, because Mr Shafron was the company secretary of James Hardie Industries Ltd (JHIL), and secondly, because Mr Shafron was a person who makes, or participates in making decisions that affect the whole, or a substantial part, of the business of the corporation. On appeal, Mr Shafron argued that the duties practiced by him as company secretary were limited to company secretarial functions, and did not extend to general counsel functions such as providing advice to the board about the Australian Stock Exchange (ASX) issue and the actuarial issue. Mr Shafron sought to delimit the company secretarial functions by arguing that it should be equated to the functions of the joint company secretary, Mr Cameron, whose functions were primarily administrative. Mr Shafron further argued that he was not a person who participated in making the decision in relation to the separation proposal, because that was a decision for the board, of which Mr Shafron was not a member.
Finally, Mr Shafron argued that if he was an officer (on either basis), he had, in any event, not breached his duties in relation to either the ASX issue or the actuarial issue.
2. RELEVANT LAW FOR DECISION MAKING
The relevant law relied on by the judge in making the decision was under section 180(1) of the Corporations Act which provides that directors and other officers of a corporation must exercise the powers and duties provided to them with the degree of care and diligence that a reasonable person would exercise. Under section 9 of the Corporation Act, an officer of a corporation can be defined as a person who: * is a director or secretary of a corporation; or * makes or participates in making decision that affects the
Duties under section 180(1) of the Act attach not only to directors but to officers more broadly (directors, company secretaries and certain others). The NSW Court of Appeal found that Mr Shafron was an officer on two distinct bases. Firstly, because Mr Shafron was the company secretary of James Hardie Industries Ltd (JHIL), and secondly, because Mr Shafron was a person who makes, or participates in making decisions that affect the whole, or a substantial part, of the business of the corporation. On appeal, Mr Shafron argued that the duties practiced by him as company secretary were limited to company secretarial functions, and did not extend to general counsel functions such as providing advice to the board about the Australian Stock Exchange (ASX) issue and the actuarial issue. Mr Shafron sought to delimit the company secretarial functions by arguing that it should be equated to the functions of the joint company secretary, Mr Cameron, whose functions were primarily administrative. Mr Shafron further argued that he was not a person who participated in making the decision in relation to the separation proposal, because that was a decision for the board, of which Mr Shafron was not a member.
Finally, Mr Shafron argued that if he was an officer (on either basis), he had, in any event, not breached his duties in relation to either the ASX issue or the actuarial issue.
2. RELEVANT LAW FOR DECISION MAKING
The relevant law relied on by the judge in making the decision was under section 180(1) of the Corporations Act which provides that directors and other officers of a corporation must exercise the powers and duties provided to them with the degree of care and diligence that a reasonable person would exercise. Under section 9 of the Corporation Act, an officer of a corporation can be defined as a person who: * is a director or secretary of a corporation; or * makes or participates in making decision that affects the