Two recent decisions of the High Court of Australia concerning the James Hardie litigation have demonstrated the consequences for company officers for failing to adhere to their statutory duties.

The High Court held several non-executive directors and the company secretary of James Hardie Industries Ltd liable for failing to discharge their duties as company officers with the requisite degree of care and due diligence that a reasonable person in their position would have exercised. The relevant conduct in this case was their approval of a misleading media release to the Australian Stock Exchange.

The High Court’s decision was particularly interesting in respect of the company secretary, who was also the company’s general counsel. As general counsel, the officer was expected to be familiar with the disclosure obligations of publicly listed companies. The High Court held that the officer breached his duties as company secretary by not applying his knowledge as general counsel to his secretarial duties. The two roles held by the officer were indivisable, according to the High Court, and must be regarded as a composite whole.

The case has implications for company officers who join boards to contribute specialised skills and expertise in particular areas relevant to a company, such as legal and financial compliance. An officer of a company must apply the breadth of their skills, knowledge and expertise when exercising their statutory and fiduciary duties.

If you would like advice on your obligations under the Corporations Act 2001 (Cth) or are interested in outsourcing the role of company secretary then please do not hesitate to contact Partner Peter McGrath.