Directors’ Duty of Care in Australia—A Reform Model?

Abstract

Unlike in Hong Kong, the Australian responses to corporate collapses in the modern commercial world have been implemented at both judicial and legislative levels over a period of decades. Hong Kong has lagged behind the reform process, only relatively recently announcing that it will review its company laws with a view to reforming, inter alia, directors’ duties. Such a review naturally leads to an examination of options utilised in other nations. This article looks at the directors’ duty of care in Australia, analysing whether the approach taken there provides any useful guidance in regard to options for reforming jurisdictions such as Hong Kong. It is concluded that instruction may be gained from both statutory reforms of the duty of care and the judicial development of an objective standard of care in Australia. Ultimately, the Australian legislative regime is not without legitimate criticism and reforming jurisdictions should only selectively adopt certain changes that have been made. Nevertheless, there are clearly lessons that places such as Hong Kong can learn from the corporate law reform process in Australia.