The Supreme Court’s decision to ban 10 former directors of James Hardie symbolically tightens the vice or board members, executives and non-executive directors.

Dishing out bans and fines at the “upper end of expectations” has sent a loud and clear reminder to all those in senior corporate positions that activities viewed as “serious and flagrant breaches of duty as directors” will not be tolerated. The James Hardie Group were found to have negligently made misleading statements in a deliberate attempt to influence the market in respect to attendant asbestos claims. The Judge said the if the Directors did not support a draft press release that contained details of a new compensation trust would be ”fully funded” and offered ”certainty” to claimants suffering from asbestos diseases, then they should have complained about such statements. During the proceedings the directors claimed they had either not read the release or had no recollection of reading, the press release. Such collective denial of recollection was not accepted as genuine by the Courts.

However, the Australian Institute of Company Directors does not believe the decision and the penalties attached will make it more difficult for companies to attract top level board candidates., claiming that existing law already provides for the duty to act honestly and disclose material information to the market. The judgment is seen simply as upholding existing law, rather than setting the foundation for new ones.