Abstract:
As the fate of a company rests largely in the directors' hands, in Australia both the common law and statute law (Corporations Law, s 232(4)) impose on directors a duty to conduct the company's affairs with due care and diligence. This article evaluates the directors' statutory duty of due care and diligence in light of the shortcomings underlying the common law approach to this duty. In the course of this discussion the article focuses on the accuracy of suggestions that the amendment of s 232(4) by the Corporate Law Reform Act 1992 (Cth) was unnecessary and has not changed the law. It is ultimately submitted that this amendment will have a significant impact on the directors' duty of care, requiring directors to maintain a considerably higher standard. The article concludes with a comparison between s 232(4) and its New Zealand counterpart, s 137 of the Companies Act 1993, examining whether the latter may have better served Australian company law.