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03 Sep 2015

Bill redefining directors’ liability in the Northern Territory passed

by Margaret Michaels, Nicole Besgrove

Executive officers of entities operating in the Northern Territory need to understand the changes to directors' liability.

The Statute Law Amendments (Directors' Liability) Bill 2015 was passed on 26 August 2015 by the Legislative Assembly of the Northern Territory (without amendment) and is expected to commence on a day to be fixed by the Administrator by Gazette notice.

The Bill reflects the approved Council of Australian Governments' (COAG) guidelines to deliver a nationally-consistent and principles-based approach to the personal criminal liability of directors and officers for corporate offences.

Upon commencement, the new legislation will redefine the current directors' liability for corporate offences in 40 Acts and two Regulations by inserting new liability provisions which are consistent with the three types of director liability outlined in the COAG guidelines:

  • Type 1 – the failure of the director to take reasonable steps to prevent the corporation’s offending must be proved by the prosecution beyond reasonable doubt;
  • Type 2 – a director is deemed to be liable unless they can produce enough evidence to suggest that there is a reasonable possibility that a defence applies. The prosecution must prove beyond reasonable doubt that the defence does not apply; and
  • Type 3 – a director is deemed to be liable for a corporate breach unless they can produce enough evidence to prove their defence on the balance of probabilities.

We previously examined the implications of the Bill for environmental offences, in particular when a director will be personally liable for environmental offences committed by a corporation under the Energy Pipelines Act and Waste Management and Pollution Control Act. In addition to the Energy Pipelines Act and the Waste Management and Pollution Control Act, the new legislation will amend the director liability provisions in the following (amongst others):

  • Electricity Reform Act
  • Public and Environmental Health Act 2011
  • Residential Tenancies Act
  • Transport of Dangerous Goods by Road and Rail (National Uniform Legislation) Act 2010
  • Utilities Commission Act
  • Water Supply and Sewerage Services Act.

What should executive officers do?

Executive officers, either a director or other person who is concerned with, or takes part in, the management of the body corporate, should familiarise themselves with the new provisions in the Northern Territory where that body corporate will operate within the Northern Territory jurisdiction.

 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.