News

Statement on the James Hardie Case

Fri, 04 May 2012 09:13:40 +1000

The decision by the High Court (Peter James Shafron v Australian Securities and Investments Commission) is welcomed by lawyers working for corporate Australia for one reason – and that is the clarity it provides businesses on the role of in-house lawyers.

“In practical terms, the decision should have little impact on the role of in-house lawyers, in particular general counsel. ACLA’s discussions with members of the profession have revealed that most general counsel who regularly attend Board meetings already consider themselves as ‘officers’ under s.9 of the Corporations Act,” said Tony de Govrik, Legal Affairs and Communications Director, ACLA.

“However, this is a clear warning to in-house lawyers who are also company secretary for their company, that the two roles cannot be separated to avoid liability under the Corporations Act by arguing that they are not an “officer” of the company” he said.

With around 40% of general counsel also acting as company secretary, and with these dual roles being pivotal for business, ACLA believes there may be greater onus placed on them to educate their businesses about the way in which a Court may perceive their role and the actions of the business.

It is now clear that the Court will look at the role, not as defined by the tasks and responsibilities given to the position. Accordingly, general counsel should think about tasks their company may ask them to perform and what the implications may be for them and their companies.

Background

Mr Shafron, the former General Counsel and Company Secretary of James Hardie Industries Ltd, had argued that the contraventions of s.180(1) of the Corporations Act 2001 (breach of duties of care and diligence by an “officer” of the corporation) alleged against him related to his responsibilities as general counsel and not to his responsibilities as an “officer” of the company and should therefore not be subject to s.180(1). Mr Shafron did not dispute that s.180(1) applied to him in his capacity as company secretary but he maintained that the alleged contraventions of the section related to his actions solely in his capacity as general counsel and that accordingly the section should have no application to him in that capacity.

The High Court rejected this argument and found that Mr Shafron’s responsibilities with James Hardie as company secretary and general counsel were indivisible and must be viewed as a composite whole. The scope of responsibilities of a particular officer is to be determined by an examination of all the tasks performed for the company by the officer. Furthermore, the Court found that the role of a particular company secretary cannot be deduced from an examination of the kinds of tasks that other company secretaries, whether at that company or in general, might perform.

Implications for In-house counsel

The two judgments handed down by the High Court serve as a salutary warning to directors and other “officers” (under the broad definition of “officer” in s.9 of the Corporations Act) of a corporation of their statutory duties. But what are the immediate take-outs for in-house counsel from all of this? These can best be summarised as follows:

• the main message for in-house counsel is that the ruling makes it clear that senior executives (including general counsel) and other “officers” of a company must ensure that they properly inform and advise the Board (or CEO) of material matters -particularly those that may be adverse to the interests of the company. Full and frank disclosure seem to be the operative words

• the decision highlights to corporate counsel who also act as company secretary the need for them to accurately record the minutes of a meeting and to issue them in a timely fashion and for directors and the chairman to pay particular attention to the accuracy of the minutes when being adopted and signed at the following Board meeting

• other than the above, in practical terms, the decision will probably have little impact on the role of senior in-house counsel in a company as it is believed that most general counsel who regularly attend and advise at Board meetings (whether acting in the dual role of company secretary or not) already consider themselves to be "officers" of their company under s.9 of the Corporations Act and conduct themselves accordingly

ENDS

Ethics and Killing all the Lawyers

Thu, 03 May 2012 09:47:32 +1000

In shades of Shakespeare's immortal quote from Henry VI "The first thing we do, kill all the lawyers", News Corp supremo Rupert Murdoch last Friday gave evidence before the UK Leveson inquiry that he "should have gone there and thrown all the damn lawyers out of the place."

A little more recently than Shakespeare, in 1918, US Senator Hiram Johnson was credited with first coining the phrase "The first casualty of war is truth."

In the light of the current Leveson inquiry into the "Culture, Practice and Ethics of the Press" one might care to postulate that "The last consideration in journalism is ethics."

This culture was certainly given some credence in an address by Bruce Guthrie to a breakfast meeting hosted by Greens List Barristers last week in Melbourne.

Guthrie is a career journalist who has edited three of Melbourne's major metropolitan newspapers - The Age, The Sunday Age and the Herald Sun as well as three national magazines and is currently a columnist for The Sunday Age.

He is also author of "Man Bites Murdoch" - a book about his unfair dismissal claim against News Limited (which he won) following his "sensational sacking" as editor of the Herald Sun in 2008.

Guthrie told the gathering of lawyers and other professionals that in all his meeting with Rupert Murdoch while an editor at News Limited he does not recall Murdoch once talking about journalism or ethics - it was always about "audience".

In-house lawyers looking for guidance in the area of ethics will be pleased to know that a 3rd edition of ACLA's popular Ethics for In-house Counsel handbook is in production and that a National Ethics Panel comprising senior General Counsel will, in conjunction with the launch of the 3rd edition, soon be made available to members who face ethical dilemmas.

For further information please contact Tony de Govrik at tonydegovrik@acla.com.au or telephone 02 9953 1057

ASX Proposing Reforms for the Small to Mid Cap Sector

Fri, 13 Apr 2012 11:12:54 +1000

The ASX has recently released a consultation paper proposing several reforms to address the needs of small to mid cap companies.

The proposal includes changes to the current capital raising and admission requirements.

The paper also includes a summary of the feedback given to the ASX in response to the Issues Paper on Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies released in October 2011.

This summary gives some useful advance warning of likely Listing Rule reform affecting mining and oil and gas companies.

To read more on an article by Middletons please click here

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Curtin University to Offer New Law Degree

Tue, 10 Apr 2012 11:09:17 +1000

Curtin University plans to become the fifth WA university to offer a law degree as early as next year.

The University's council has approved a proposal to develop a Bachelor of Laws degree, to be offered through Curtin's business school.

The proposal is to be developed and submitted to the WA Legal Practice Board. Curtin would seek to have full industry accreditation for the course before any students were accepted.

Curtin University Vice-chancellor Jeanette Hacket said it is intended that the Bachelor of Laws will commence in 2013.

Perth's legal market is becoming increasingly global and keen to embrace new people with top-quality legal skills.

ENDS

Review of Australian Contract Law

Thu, 29 Mar 2012 09:46:29 +1000

The aim of the Australian contract law Discussion Paper is to seek views on possible reforms to contract law to cut red tape for Australian businesses and to help business prosper in an increasingly globalised and digital economy.

The Attorney-General said that while Australia performs well, currently ranked by the World Bank at 17 out of 183 countries for ease of enforcing contracts, we cannot afford to be complacent. Other countries are also considering reform of their contract law to increase efficiencies and boost productivity. For example, the European Commission identified potential gains of 26 billion Euros from the harmonisation of contract law across 27 European member states.

The Discussion Paper asks about people’s current experiences of the law and whether the law could better support personal and business transactions. In addition, the Discussion Paper seeks advice about the potential internationalisation of Australia’s contract law, with a view to improving the attractiveness of Australia as a business and investment destination.

The paper considers whether Australian contact law could be reformed to:

• enhance accessibility, certainty and simplicity
• set standards of conduct
• better support innovation and participation in the digital economy
• better meet the evolving needs of businesses particularly small and medium businesses
• make the law more elastic to promote long-term relationships, and
• harmonise and internationalise contract law.

The Attorney-General’s Department is seeking views about the problems that businesses and individuals experience when contracting, and whether reforms could address these issues. Comments may address any of the questions which appear throughout the paper, or any other matters relevant to contract law. The Attorney-General’s Department also welcomes further information or discussion points that will contribute to the reform debate.

There will be a three-month consultation period. Submissions must be received by the Attorney-General’s Department no later than COB Friday 20 July 2012.

To download the Discussion Paper click here

New Legislation to Enhance Audit Quality

Wed, 07 Mar 2012 16:42:29 +1000

The Federal Government last week introduced new legislation into the Parliament, the Corporations Legislation Amendment (Audit Enhancement) Bill 2012, aimed at improving the quality and transparency of the auditing process.

The Bill will introduce a range of reforms to improve the standard of audits in Australia, following on from a Treasury review of audit quality and extensive stakeholder consultation.

The former Parliamentary Secretary to the Treasurer, David Bradbury, said that "While Australia has an effective audit quality framework, the reforms contained in this Bill will help to further strengthen regulatory oversight and ensure that we maintain standards in line with international best practice.”

Significantly for corporations, one of the measures in the Bill includes maintaining the five-year auditor rotation requirement but allowing a two-year extension where it will not give rise to a conflict of interest and will prevent the loss of knowledge and experience in situations where rotation could undermine the quality of the audit.

To read the Parliamentary Secretary’s Media Release click here

Victorian Legislation to Enable Pro-Bono Work

Fri, 02 Mar 2012 10:47:52 +1000

ACLA welcomes the announcement by the Victorian Attorney-General, The Hon Robert Clark MP, to introduce legislation to allow Victorian in-house lawyers to undertake pro-bono legal work in the same way as their private practice colleagues.

The announcement comes after representation by ACLA and others raised concerns about the legislative barrier being the principal obstacle to in-house lawyers undertaking pro-bono work in Victoria.

Up until now, the practicing certificates available to Victorian in-house lawyers limited them to providing legal advice to their employer only. If passed, this change will mean they will now be able to provide legal services pro bono to external parties.

With this reform, Victoria joins Queensland and New South Wales in lifting this restriction. ACLA hopes to work with the South Australian Attorney General’s Department on similar reform in that jurisdiction.

“We have long held the belief that Victorian in-house lawyers should be allowed to undertake pro bono work. If passed, thousands of in-house lawyers, previously prevented from using their professional expertise outside their workplace, will be able to give back to the community just like their private practice counterparts and in-house lawyers elsewhere in the country”, said Trish Hyde, ACLA CEO.

ACLA welcomes this announcement and thanks the Attorney-General for taking this important step for the in-house legal profession.

ENDS

Financial Reporting Panel

Thu, 09 Feb 2012 10:38:24 +1000

The Government has announced that the Financial Reporting Panel (FRP) will be wound up.

The FRP was established in 2006 to resolve contested issues between the Australian Securities and Investments Commission (ASIC) and reporting entities over the application of accounting standards to financial reports.

The Parliamentary Secretary to the Treasurer, David Bradbury said: 'The concept of the FRP as an alternative dispute resolution mechanism was a worthy one, but demand for the mechanism has proven to be too low to justify its continued operation."

The Government previously announced it would wind up the FRP in 2010-11 after only one case was referred to the FRP between 2006 and 2010. Four cases were referred to the FRP in August 2010, which led to the Government reviewing the ongoing role of the FRP. However, there have been no referrals to the body since that time.

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Issues for Public Cloud Users

Thu, 09 Feb 2012 10:35:34 +1000

Last month, in what is thought to be the largest criminal copyright case ever brought by the United States, authorities charged seven individuals and two companies who were allegedly responsible for massive worldwide online piracy. It is alleged the vehicle used was online file-sharing service Megaupload.

Megaupload is a public cloud service, meaning it provides a service for the storage of data virtually, however, its storage facilities are available to the general public over the internet (as opposed to a private cloud).

In addition to the charges laid, the Megaupload public cloud system has been taken offline greatly impacting on its various users (including business, not-for-profit and academics) who were utilising the service to legitimately store and share their files.

It is unclear when (if ever) users will be able to regain access to their data.

This case has provided a timely reminder to organisations for the need to have contingencies in place to reduce the risk of data loss.

Middletons have provided some recommendations for public cloud users, including doing one or more of the following:

* critical data should continue to be stored on-site with the user

* data should be stored with a number of public cloud providers - thus spreading the risk of a provider being shut down

* organisations should ensure that effective business continuity processes are in place in the event of data or service loss.

To view Middletons press release click here

ENDS

Online CLE now available

Wed, 08 Feb 2012 12:39:47 +1000

Now available to purchase, via the ACLA website, is a range of current CLE interactive online seminars.

Whether you are in the comfort of your own home, in the office or on your ipad, the Online CLE program is available for use 24 hours a day.

Each interactive Online CLE comes with an accompanying slide show that can be downloaded for your convenience.

Once you purchase and download the seminar you can watch it whenever you want, as many times as you want.

The number of CLE points gained for the registration and viewing of each seminar is stated on the purchasing page.

ACLA will continue to add to the suite of Online CLE and we encourage everyone to regularly check the website for the latest material.

To view the Online CLE library or to purchase a seminar click here.

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