James Hardie decision: the most important in the last decade, says UWS law expert

Date: 24/04/2009

A leading law expert at the University of Western Sydney says the case against the James Hardie directors and executives is the most significant case ever undertaken in Australia in terms of misleading and deceptive corporate conduct since the NRMA case of 1995, when a few simple words in a prospectus stopped the conversion of the company to a listed commercial entity.

Professor Michael Adams, Head of the School of Law at UWS, has 25 years of experience in corporate law and governance and has conducted research widely in the area of corporate law in Australia, Europe, North America and Asia.

Professor Adams has followed the James Hardie case closely and believes the judgment will have a profound impact on the laws that govern the accountability and corporate standards of senior management under Australian law.

"This is certain to be one of the most significant corporate law cases in Australian history and has been one of the largest civil trials we've seen in this country," says Professor Adams.

"It is important to note that the recent decision in the James Hardie case has two important elements. It holds the company liable for making misleading statements, and it also makes the non-executive directors and senior executives accountable for not taking reasonable care."

Over the last five years the courts have sent out a very strong signal that high standards of professionalism are expected from large listed companies. ASIC have been pivotal in protecting consumers, investors and creditors by pursuing corporations who are committing corporate misconduct.

"ASIC has been very successful in proving a number of serious breaches of the Corporations Act in the James Hardie case decided today. As yet, we do not know the final penalties, such as the amount of damages or the compensation that will flow from this case, but this case has been successful for ASIC as a corporate regulator," says Professor Adams.

Recently, Professor Adams completed a three-year Australian Research Council (ARC) funded project on the corporate governance of boards of directors in Australia, in conjunction with the law firm Dibbs Abbott Stillman, and the Centre for Corporate Governance at the University of Technology, Sydney.



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