A number of provisions imposing personal criminal liability on directors for misconduct by a company will be repealed under the proposals in the second tranche of reforms. However, certain provisions will be retained where dictated by strong policy reasons, or where the provision in fact imposes accessorial liability.

On 1 June 2012, the second tranche of the Commonwealth Government's Personal Liability for Corporate Fault Reform Bill 2012 (the Bill) was released for public consultation.  While the first tranche of the Bill addressed Commonwealth Treasury portfolio non-tax legislation, the second tranche proposes to amend certain Commonwealth legislation (other than Treasury portfolio legislation). The reforms aim to ensure that where derivative liability for directors (ie personal criminal liability for misconduct by a company where the director may not be aware of, or be able to prevent, the commission of an offence by a company) is imposed, it is fair and principled, and not imposed as a matter of course.

The second tranche of the Bill proposes to amend the following legislation:

  • Classification (Publications, Films and Computer Games) Act 1995 (Cth);
  • Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth);
  • Health Insurance Act 1973 (Cth);
  • National Measurement Act 1960 (Cth);
  • National Vocational Education and Training Regulatory Act 2011 (Cth);
  • Therapeutic Goods Act 1989 (Cth); and
  • Veterans’ Entitlements Act 1986 (Cth).

The Bill proposes to remove a significant number of provisions imposing derivative liability on directors. However some provisions are proposed to be retained where strong policy reasons exist for their retention, for example provisions concerning offences that aim to prevent significant public harm (such as harm to public health) or where a corporation’s liability is unlikely to sufficiently promote compliance (for example, where there is a real risk that offences by corporations cannot be effectively prosecuted due to corporate insolvency). Provisions that impose accessorial liability are also outside of the scope of the review.

Submissions on the public consultation were due by 29 June 2012.  The Government has committed to introducing the final form of the Bill into Parliament later in the year.

See Government’s media release, dated 1 June 2012.

See also the draft Bill and its explanatory memorandum.