What governance mechanisms should General Counsel look to establish between the board and C-level executives in order to best manage officer reporting and liability – particularly in areas such as risk management, cybersecurity, and technology?

The directors of the company must be aware of their duties under the Corporations Act 2001.

In Australia, the directors are vicariously liable for a company’s actions or omissions in certain circumstances. Whenever a company has been managed responsibly by a director, he or she will not be liable for the debts of the company. Directors who breach the law however, can become personally liable for the company’s debts.

The Corporations Act 2001 is the main act that covers the duties of a director. Directors may be acting illegally and be in breach of the civil and criminal provisions of this act, which could make them personally liable for the debts of their company.

The directors may also be vicariously liable in certain circumstances such as; a company’s breach of taxation requirements, failure by directors to adequately implement and/or supervise environmental compliance programs for the company, and/or failure by directors to implement appropriate occupational health and safety procedures as required under Occupational Health and Safety (OHS) legislation.

Besides the Corporations Act 2001, there are additional sources to consider as to a director’s liabilities. These include the Competition and Consumer Act 2010, the Crimes Act 1914, the Work Health and Safety Act 2011 and the Anti-Money Laundering & Counter-terrorism Financing Act 2006.

One of the current trends among the regulatory agencies in Australia is investigation of corporate culture. The regulatory bodies are now trying to prosecute companies who have an internal culture which tacitly authorises non-compliance.

This would include situations where, despite existence of formal procedures and documents that appear to create a complying environment, the reality within the company demonstrates that non-compliance is expected. An example of this would be where employees are pressured to act in a non-compliant way due to concern for their employment.