Secretary And General Counsel Againstâ€Free Samples for Students

Question: Discuss About The Secretary And General Counsel Against? Answer: Introducation In Shafron v ASIC (2012) the appeal made by Peter James Shefron was dismissed by the High Court. Mr. Shefron was acting as the company secretary and general counsel against the decision that he had breached s180(1), Corporations Act when the failed to discharge his duties as officer of James Hardie industries Ltd. (JHIL) by excising the same care and diligence that can be expected from any other reasonable person under similar circumstances. It was held by the High Court that 7 former, non-executive directors of the company were liable for approving a misleading ASX declaration related with the restructure of James Hardie Group. According to this restructure, the asbestos related liabilities of the company were separated from its trading companies. However, the High Court stated that the General Counsel and company secretary, Mr. Shafron can be considered to be a thing as the officer of the corporation when he failed to give appropriate advice to the board regarding the misleading ASX declarations and also the limitations concerning an actuarial report. The court had noted that there were two ways in which s180(1) was held to be breached by Shefron. First of all, there was failure on his part to give advice to the CEO of the company or the board of the company that it is required to disclose to the ASX certain information regarding a Deed of Covenant and indemnity related with the separation of JHIL from two of its subsidiary companies. Similarly, it was also noted that there was the failure on the part of Shefron to give advice to the board of JHIL that there will critical limitations present in case of the study. That was commissioned by him to evaluate the asbestos related liabilities of the company. In this case it was not disputed by Mr. Shefron that the provisions of s180(1) were applicable to him in his position as the secretary of the company. However the issue that had to be decided by the High Court was if the provisions of s180(1) can be held to be applicable to Mr. Shefron regarding the conduct which he had submitted to have undertaken while acting as General Counsel of the company. In this regard, it was claimed by Mr. Shefron that s180(1) can be applied only in case of the functions that were performed by him while acting as the company secretary. It was further argued by him that the contraventions of s180 that were alleged against him were related with the responsibilities that have been imposed on him as the General Counsel of the corporation and not regarding the responsibilities that he had in his capacity as the officer of the corporation and therefore, the provisions of s180(1) were not applicable to him in this regard. But this argument was rejected by the High Court. It was stated that the responsibilities of Mr. Shefron while acting as the company secretary and also the General Counsel of JHIL cannot be separated and therefore they need to be considered as a composite whole. The court further stated that the scope of responsibilities that can be imposed on a particular officer of the company have to be decided by evaluating all the tasks that were performed by such an officer for the company. Therefore the role played by a particular company secretary cannot be evaluated on the basis of the examination of the kind of tasks that were performed by other company secretaries, in that particular company or in other. Therefore, it was stated in the majority judgment that the proposition that some distinction can be made between the capacities under which certain responsibilities had been undertaken by Mr. Shefron wrongly assumed that the work done by him in his capacity as the secretary of the company could not and in fact did not overlap with the duties performed by him as the General Counsel of the corporation. The basic difficulty related with the submission made by Mr. Shefron was that no evidence was found by the court which could reveal or suggests that certain tasks were undertaken by Mr. Shefron . In one capacity and similarly, yet perform certain other tasks in another capacity. The court noted the fact that such evidence was not provided by Mr. Shefron during the trial. On the other hand, whatever evidence had been submitted to the court regarding the role played by a company city as well as the General Counsel of a public company was not in support of the proposition that there was a difference present as claimed by the submissions made by Mr. Shefron. However, as mentioned by the court, the responsibilities of Mr. Shefron had to be decided at the question of fact. The reason that the title, General Counsel and company secretary was being used by Mr. Shefron, it indicates that he was also qualified as a lawyer. Similarly, he had admitted in court that he had practiced law in Australia and also in California. Another significant element that was present regarding the responsibilities of Mr. Shefron was related with giving advice regarding, and whenever necessary, taking steps that were required to make sure that the company complies with all the relevant legal requirements. These included the requirements that were applicable in case of JHIL as a public listed company. In this regard has been mentioned by the primary judge, and also by the Court of Appeal that this aspect of the responsibilities imposed on Mr. Shefron can be described as the duty to protect the company from "a legal risk". There was no doubt that this duty included the responsibility to make sure that purely administrative. Tasks were performed by the company, for example provid ing the necessary information to the ASX and also the maintenance of appropriate records of the board meetings. However, the responsibilities imposed on Mr. Shefron were not confined to these duties. He had much more wider responsibilities than administrative duties and these extended to provide the necessary advice whenever required. The court noted the fact that all the tasks that were performed by Mr. Shefron were undertaken by him for the purpose of fulfilling his responsibilities as the company said the General Counsel of the corporation. Particularly, as a result of his qualifications and his position in the company, his responsibilities as company secretary and General Counsel included the responsibility of providing advice to the company how he could fulfill its duties of disclosure. Similarly, when Mr. Shefron procured advice from others and placed such advised before the board of the company, his responsibilities included the duty to identify the limits of the advice that was given by a third party. Therefore in this case, it was argued by Mr. Shefron that he had been acting as the general counsel of the company and not in his capacity as the company secretary. Therefore, he cannot be considered to be a thing as an officer of the company while he gave advice to the board of the company regarding the researcher and the draft ASX declaration. However, this argument was rejected by the High Court. It was held that the job of Mr. Shefron has been decided both as the publicity as well as the general counsel, it can be stated that all the work was done by him while performing this joint responsibility. Therefore it is not possible to differentiate the responsibilities that have been imposed on Mr. Shefron. Moreover, it is required under s180(1) that an officer of the corporation should discharge all these duties by exercising the same care and diligence and not only the statutory duties. Consequently, it was not relevant, if some of the duties of Mr. Shefron to give advice to JHIL wer e the result of the fact that he was also acting as the General Counsel of the company. In any case, it was stated by the High Court that Mr. Shefron was also acting as the an officer of the corporation. This was stated on the basis of the fact that he played a role in making the decisions that had an impact on the whole are significant part of the business of the company. As a result, he fell under the definition of an "officer" as provided by s9, Corporations Act. In this case, the High Court also gave significant guidance that can be used regarding the statutory criteria of an officer. For example, it was not significant if Mr. Shefron had not taken a part in the making of the final decision, because he still took part in the decision-making process and this was sufficient to consider him as an officer of the corporation. The significant principles on which the High Court had relied by giving its decision include the fact that even if it was not mentioned expressly in the judgment by the High Court, it had endorsed the findings of Gzell, which reinforces the significance of the duties of non-executive directors to evaluate properly and independently all the information that has been placed before them, especially the information related with important strategic announcements. Therefore, the nonexecutive directors cannot blindly rely upon the advice given by the management. This was also the main theme of the prosecution of Centro directors by the ASIC. This decision also highlights the fact that unless something more than inferential evidence is presented to the contrary, the approved board minutes carry significant progress in value in the form of the business record of the events that had taken place at the board meeting. Due to this reason, before approving the minutes of the meeting, it is the responsibility of the directors to make sure that these minutes have reflected and recorded the events accurately. This responsibility may require the directors to take their own notes or the directors may have to make a request that the board meetings should be recorded that can be used to resolve a dispute that may arise in this regard. In this decision, the High Court had also provided significant guidance related to the duties of the ASIC in bringing civil penalty proceedings. For this purpose, the High Court confirmed that the failure to produce any witness cannot be termed as unfair per se. In any case, it does not increase the other evidence that has been produced in the court. However, it stated that such failure can be a ground for miscarriage of justice, considering the facts of the case. Similarly, it was also held by the High Court. A person acting as both a company secretary as well as the general counsel will generally be considered to be acting as an officer of the Corporation while providing legal advice to the Corporation. In the same way, it is also a significant finding of the High Court that by preparing the draft documents for the approval of the Board, it can be said that a general counsel may have taken part in making decisions that have an impact on the whole or a significant part of the business of the company. Therefore it can be said that the general counsel was acting as an officer of the company in context of the duty imposed by s180(1). There is no doubt that many in-house counsel have been unsettled by this aspect of the decision. Similarly the effect of this decision may also extend to any executive undertaking that is equivalent to regulatory tasks that are used in the board decisions. Such a situation may result in considerably expanding the nu mber of people who can be considered as the officers of the company. Thereby, and all these persons can be subject to the obligations and duties imposed by the corporations it, including the punitive provisions. Reference Shafron v Australian Securities and Investments Commission [2012] HCA 18