Directors in Troubled Times

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The global credit crisis has placed company directors under extreme pressure. On the one hand, the economic situation has made doing business and obtaining access to finance more difficult and uncertain, especially for larger companies operating on a global scale, and companies in the financial sector. On the other hand, the law continues to demand that directors act in the best interests of their company, that they exercise due care and diligence in financial and other matters, and that they avoid allowing the company to trade while insolvent.

The directors' tasks include setting of realistic corporate goals, and guiding and monitoring of management, while scrupulously attending to their legal responsibilities. The performance of these tasks appears to have become a greater challenge in the new global business and financial environment. The consequences of failure to meet the requisite standards can be devastating for the company and individual directors. Adding to such worries are the current moves for further regulation of compensation arrangements for directors and officers.

On 11 August 2009, a group of Australia's leading company lawyers was brought together by the Supreme Court of New South Wales to explore these issues at the Supreme Court Annual Corporate Law Conference. This publication contains full versions of the speakers' presentations, including an introductory essay.

It will be of interest to company directors and their advisers, including lawyers, accountants and investment bankers. The conference presentations have given carefully considered explanations of the demands placed by current company law on directors. The final speaker asked the question, 'how do directors sleep at night?' Fortunately, he and the other speakers have offered some answers.