The purpose of this Memorandum is to adopt formally the Council of Australian Governments' (COAG's) "Personal Liability for Corporate Fault – Guidelines for applying the COAG Principles" as New South Wales policy. A copy of the Guidelines is available here.
The Guidelines were approved by COAG on 25 July 2012, as part of the implementation of the National Partnership Agreement to Deliver a Seamless National Economy.
Provisions which impose criminal liability on directors and officers for corporate offences in circumstances beyond normal criminal law principles of accessorial liability have proliferated inconsistently and without clear justification over many years. This has created undue complexity, a lack of clarity about responsibilities, and unnecessary regulatory burden.
The COAG Guidelines provide a policy framework describing the different types of Directors' Liability Provisions that may be used in legislation and setting out the policy criteria which must be considered before any Directors' Liability Provision is applied.
Ministers are to ensure that the Guidelines are applied in the development and drafting of all new legislation in New South Wales.
Where, having applied the Guidelines, it is considered that a Directors' Liability Provision may be justified for inclusion in any proposed legislation, Parliamentary Counsel is to refer the proposed provision to the Department of Premier and Cabinet for advice.
As well as applying the Guidelines going forward, existing NSW Acts have been audited against the Guidelines. A summary of the NSW audit outcomes is available here.
The Government will introduce a Bill to implement the audit outcomes later this year. The reforms will reduce the number of NSW offences to which Directors' Liability Provisions apply from over 1,000 to less than 150.
Of those that remain, the Bill will also amend the provisions to remove any "reverse onus of legal proof" (Type 3 Directors' Liability Provisions), except in the case of a small number of core environmental offences, where such Type 3 provisions are justified by compelling public policy reasons as set out in the Guidelines.
The amendments to be introduced later this year will add to the reforms already implemented by the Government in 2011 in the Miscellaneous Acts Amendment (Directors' Liability) Act.
It is noted that these reforms will not affect directors' personal criminal liability under statutory and common law 'accessorial liability' principles. As is appropriate, directors and other corporate officers may still be criminally liable in any circumstances where they have been knowingly involved in, or have personally aided, abetted, counselled or procured the commission of a criminal offence.
Barry O'Farrell MP
Issued: Office of General Counsel, Department of Premier and Cabinet
Contact: Fiona Cameron, Principal Legal Officer
Telephone no: 9228 3225
Date: 31 July 2012
This Memorandum does not supersede any other Memoranda.