The COAG Principles are as follows:
1. Where a corporation contravenes a statutory requirement, the corporation should be held liable in the first instance.
2. Directors should not be liable for corporate fault as a matter of course or by blanket imposition of liability across an entire Act.
3. A ‘designated officer’ approach to liability is not suitable for general application.
4. The imposition of personal criminal liability on a director for the misconduct of a corporation should be confined to situations where:
a) there are compelling public policy reasons for doing so (e.g. in terms of the potential for significant public harm that might be caused by the particular corporate offending);
b) liability of the corporation is not likely on its own to sufficiently promote compliance; and
c) it is reasonable in all the circumstances for the director to be liable having regard to factors including:
i) the obligation on the corporation, and in turn the director, is clear;
ii) the director has the capacity to influence the conduct of the corporation in relation to the offending; and
iii) there are steps that a reasonable director might take to ensure a corporation’s compliance with the legislative obligation.
5. Where principle four is satisfied and directors’ liability is appropriate, directors could be liable where they:
a) have encouraged or assisted in the commission of the offence; or
b) have been negligent or reckless in relation to the corporation’s offending.
6. In addition, in some instances, it may be appropriate to put directors to proof that they have taken reasonable steps to prevent the corporations’ offending if they are not to be personally liable.
Since the COAG Principles were adopted on 29 November 2009, the Business Regulation and Competition Working Group, comprising representatives from Commonwealth, State and Territory Governments, developed supplementary guidelines (BRCWG Guidelines) and then each Government proceeded to separately audit their own legislation against the COAG Principles and BRCWG Guidelines. On 11 February 2011 the Reform Council of COAG published a performance report1 which identified serious concerns about the progress of reforms relating to derivative liability and the failure to implement any inter-governmental process to ensure there will be nationally consistent outcomes relating to those reforms.
Given the long period of gestation, the Bill itself has remarkably little substance.
1Titled “National Partnership Agreement to Deliver a Seamless National Economy”.