Facts
- ASIC commenced proceedings against several directors of One Tel Ltd for breach of statutory duties. One Tel went into liquidation in 2001.
- Two of these directors were Mr Rich and Mr Greaves. Rich was an executive director. Greaves was a non-executive director.
- Greaves argued that his conduct did not come under the legal duties of executive officers – however, Greaves was quite an experienced business person and also the chair of the company’s finance and audit committee.
Issues
- Was ASIC able to sue Greaves by alleging negligence in terms to the alleged conduct of Rich and Greaves?
Held
- Greaves position as a non-executive director did not exempt him from owing duties to One Tel to act with due care and diligence.
- Greaves failed to reaming informed of the company’s financial position and this gave rise to a claim of breaching his duties of care and diligence.
- He could not rely on non-executive status to justify failing to satisfy the basic requirements of the job.
- Directors are expected to use their knowledge and skills to a reasonable standard.
Full Text
The full text is available here:
-- Download ASIC v Rich (2003) 44 ACSR 341 as PDF --
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