given to it by accounting practice and current commercial law (Australian Institute of Company Directors, 2004). The Hardie’s case touches such important issue as organizational legitimacy theories, shareholder wealth, and stakeholder interests in elucidating corporate behavior and corporate decisions. Public actions have succeeded in forcing Hardie into a settlement, and “voluntary” may be interpreted as an evident confirmation that social contract is ultimate foundation of company’s authority and, thus, responsibility in both financial and moral terms. The James Hardie case reminds non-executive directors that, though they are not involved in the daily running of the company, they are its officers, and will be accountable, if they fail to meet the standard and expectation of diligence and care (section 180(1) of the Corporations Act). The case does not also let general counsels to forget that they have obligations to protect the corporation from legal risks (Hamilton, F., 2009). For example, if the external expert advisers’ opinion is deferred in by the board in adopting a statement, and general counsel is in the know of some deficiency in the suitableness of that opinion, general counsel is obliged to advise the board to restrict this opinion. The James Hardie’s case has proved that directors and officers really need insurance to fill the gap of section 199A of the Corporations Act that bans a company to indemnify an officer in terms of monetary penalties under s1317G of the Corporations Act (Hamilton, F., 2009). The James Hardie’s case, and all the complications connected with it, has led to a recommended change to the law. Initially, the proposed change was that the current legislation might be modified in such a way that the corporate guise could be removed in the proper circumstances to impose
given to it by accounting practice and current commercial law (Australian Institute of Company Directors, 2004). The Hardie’s case touches such important issue as organizational legitimacy theories, shareholder wealth, and stakeholder interests in elucidating corporate behavior and corporate decisions. Public actions have succeeded in forcing Hardie into a “voluntary” settlement, and may be interpreted as an evident confirmation that social contract is ultimate foundation of company’s authority and, thus, responsibility in both financial and moral terms. The James Hardie case reminds non-executive directors that, though they are not involved in the daily running of the company, they are its officers, and will be accountable, if they fail to meet the standard and expectation of diligence and care (section 180(1) of the Corporations Act). The case does not also let general counsels to forget that they have obligations to protect the corporation from legal risks (Hamilton, F., 2009). For example, if the external expert advisers’ opinion is deferred in by the board in adopting a statement, and general counsel is in the know of some deficiency in the suitableness of that opinion, general counsel is obliged to advise the board to restrict this opinion. The James Hardie’s case has proved that directors and officers really need insurance to fill the gap of section 199A of the Corporations Act that bans a company to indemnify an officer in terms of monetary penalties under s1317G of the Corporations Act (Hamilton, F., 2009). The James Hardie’s case, and all the complications connected with it, has led to a recommended change to the law. Initially, the proposed change was that the current legislation might be modified in such a way that the corporate guise could be removed in the proper circumstances to impose
118854E_S20120229-84.docx