« Sharp as a razor, fast as a ninja | Main | Resist the Tagging enemy »

19 January 2007



I can't pretend to be hugely excited but I am curious: is the right to investigate an Enrony thing? What's the policy issue?

Corporate Blawg

The liability for false statements in reports has come from Enrony and Worldy Com. Directors are now gonna think twice (or maybe three times) before lying in official reports. The more criminal sanctions from different angles, the more directors will get excited about being honest and accurate.

The right of a public company to investigate who is interested in the shares has always been around. It's to allow companies to find out if there are any off-market transfers or further securitiy granted over the shares. The expansion is only really so that "section 212 notices" (to the shareholder on the books) can be submitted in electronic form. It's about as exciting as a damp flannel.

Thanks for the comment though.


Yes, but aren't they only liable for making reckless statements. Its a pretty high standard really isn't it??

Corporate Blawg

The liability of directors under subsection (3) of s.463 is for (1) an untrue or misleading statement is made deliberately (2) or recklessly, or (3) an omission amounts to dishonest concealment of a material fact.

As mentioned in my post of 19 October on "The Power of None", the importance of the document,the size of the company, and the impact of the reckless statement will have some baring as to whether the director should be personally liable for his statement.

However, taking s.463 on face value, the "recklessness" standard will apply to untrue statements made deliberately by a director who did not know that (or care if) the statement was untrue. This will boil down to whether the director exercised the appropriate standard of skill and care when obtaining the information that he would set out in the report. If that information turns out to be untrue, then the facts will be vital in assessing whether the director acted recklessly... Did the director know that the auditors were cowboys? Did the director know that some of the facts that the auditors relied on were untrue or incomplete?

Fundamentally, the court will construe the level of recklessness according the the director's misfeasance, and the presence of the clause in the companies act should help focus directors minds on what they are reporting.


ccWD7D mphhhtkxulhr, [url=http://lyfievjdytnc.com/]lyfievjdytnc[/url], [link=http://oaquiowxpzxu.com/]oaquiowxpzxu[/link], http://durigzpdgkhd.com/

The comments to this entry are closed.

Outside winners

Photo Albums

July 2007

Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31        
Blog powered by Typepad
Member since 08/2006