Under section 180 of the Corporations Act, directors have a duty to act with due care and diligence. In fact, the court has held that the section 180 duty is a duty to exercise directors’ powers and discharge duties with the degree of care, skill and diligence that a reasonable person would exercise if they were a director in the corporations' circumstances, held the same office and had the same responsibilities as the directors. Vines v ASIC [2007] NSWCA 75 Freda is an experienced company director. She has however been distracted over the last 6 months and has stopped reading board papers. She has not engaged in board discussions and has deferred to the CEO and CFO and their recommendations when the board was required to make decisions. One decision is now being investigated by ASIC. What are your views whether Freda has reached the required duty of care? Explain with reference to what the standard is.
Under section 180 of the Corporations Act, directors have a duty to act with due care and diligence. In fact, the court has held that the section 180 duty is a duty to exercise directors’ powers and discharge duties with the degree of care, skill and diligence that a reasonable person would exercise if they were a director in the corporations' circumstances, held the same office and had the same responsibilities as the directors. Vines v ASIC [2007] NSWCA 75
Freda is an experienced company director. She has however been distracted over the last 6 months and has stopped reading board papers. She has not engaged in board discussions and has deferred to the CEO and CFO and their recommendations when the board was required to make decisions. One decision is now being investigated by ASIC. What are your views whether Freda has reached the required duty of care? Explain with reference to what the standard is.
Step by step
Solved in 2 steps
