The Queensland Parliament has recently passed the Directors’ Liability Reform Amendment Act 2013 (‘Act’). This legislation commenced operation on 1 November 2013 and the provisions amend a broad variety of Queensland laws with respect to executive officers and the burden of liability.
Who will be affected by the Act?
Although the title of the Act indicates that it relates to Directors’ liability the Act in fact applies to ‘executive officers’ which is a much broader range of people. Executive officer means “a person who is concerned with, or takes part in, the corporation’s management, whether or not the person is a Director or the person’s position is given the name of executive officer.”
What are the amendments to the liability provisions?
The Act makes three major amendments to the liability provisions previously contained in Queensland legislation, namely:
- Reduces the number of executive officers’ liability provisions from approximately 3,800 to less than 300;
- Removes provisions that reversed the onus of proof, which means that in most cases executive officers will not automatically be deemed to be guilty unless it can be proved otherwise. The prosecution must prove that the executive officer breached the elements of the directors’ liability provisions; and
- Introduces two types of personal liability – ‘type 1’ and ‘deemed liability’ provisions.
‘Type 1’
The majority of liability provisions will fall under the category of ‘type 1’. An executive officer will commit an offence if:
- The Corporation commits an offence against an executive liability provision; and
- The Officer did not take all reasonable steps to ensure the Corporation did not engage in the conduct constituting the offence.
Under the Act, in determining whether all reasonable steps were taken, the Court must look at:- Whether the officer knew, or ought reasonably to have known, of the Corporation’s conduct constituting the offence against the executive liability provision
- Whether the officer was in a position to influence the corporation’s conduct in relation to the offence against the executive liability provision; and
- Any other relevant matter.
‘Deemed liability’
The deemed liability provisions will mean where a corporation commits an offence against a provision of the Act, each executive officer is taken to have committed an offence against the provision if:
- The officer authorised or permitted the corporation’s conduct constituting the offence; or
- The officer was, directly or indirectly, knowingly concerned in the corporation’s conduct.
What legislation does the Act not amend?
The Act does not make amendments to the Work Health and Safety Act 2011 (Cth) or Environment Protection Act 1994 (Qld). The executive officer liability provisions contained within these acts remain unchanged.
Conclusion
The Act was passed by Queensland Parliament with the expectation that red tape and the regulatory burden placed on executor officers would be reduced while still ensuring that they are held accountable where companies are involved in offences. Directors and executive officers must still ensure that they are aware of and understand their obligations. It also remains important that companies implement and operate under risk management systems to ensure that these obligations are continually met.
