Call for reforms to full disclosure
But corporate governance experts have criticised the push, saying it would be a radical step backwards and would put shareholders at considerable risk.
The comments come as the corporate regulator shines a spotlight on market-sensitive information being shared at official briefings between companies and analysts.
In a paper to the federal government and opposition, the institute said the next government should endorse greater consultation with business and favour deregulation.
AICD chief executive John Colvin said one of the most important areas of reform was to broaden the business judgment rule, which gives a director or officer of a corporation immunity from liability over company losses if their decisions were deemed to be made in "good faith".
"Deregulation - both stemming the growth in new regulation and cutting back existing red tape - is a crucial part of the new government's economic policy challenge. Creating a new system of efficient regulation is a key element of the agenda for boosting national productivity," Mr Colvin said.
"Too often, new regulation is being developed on a knee-jerk reaction to a one-off event, rather than being developed through proper regulatory processes involving risk-based assessment, consultation and proper cost-benefit analysis."
While Mr Colvin acknowledged that financial regulation - particularly banking laws - had helped protect Australia from the global financial crisis, he said it would not necessarily protect the country from a future crisis.
"The issue we're facing is not so much that we got through last GFC, but are we going to get through in the future?"
But Dean Paatsch, at Ownership Matters, said winding laws back would be detrimental to investors. "The suggestion that the cure all for over-regulation is a radical shift in directors' liability doesn't stick well," he said. "[Disclosure laws] are backed up by a standard of due care and diligence. We mess with them at our own peril."
Frequently Asked Questions about this Article…
The AICD is calling for full disclosure rules to be wound back, urgent deregulation and greater consultation with business. In a paper to the federal government and opposition it also wants the business judgment rule broadened so directors and officers would have wider immunity from liability when their decisions are deemed made in "good faith."
The business judgment rule gives directors or officers immunity from liability for company losses if their decisions are judged to have been made in good faith. Broadening that rule, as the AICD proposes, would increase directors' legal protection and could reduce their personal accountability for risky decisions.
Experts say rolling back disclosure requirements would be a radical step backwards that could put shareholders at considerable risk. They argue disclosure rules are backed by standards of due care and diligence, and weakening them could be detrimental to investor protection.
The corporate regulator has been spotlighting the handling of market-sensitive information, particularly how that information is shared during official briefings between companies and financial analysts.
John Colvin said deregulation—slowing the rise of new rules and cutting red tape—is a key part of an economic policy to boost national productivity. He also criticised what he sees as knee-jerk regulation developed after one-off events instead of through risk-based assessment, consultation and cost-benefit analysis.
Yes. According to critics in the article, reducing disclosure and loosening directors' liability could mean less transparency and weaker protections for shareholders, which may increase investment risk for everyday investors.
Dean Paatsch warned that winding back laws would be detrimental to investors. He said the idea that shifting directors' liability is a cure for over‑regulation doesn't stack up, and that disclosure laws are supported by standards of due care and diligence—changing them would be risky.
Investors should monitor government responses to the AICD paper, any proposed changes to disclosure rules or the business judgment rule, and regulatory scrutiny of company-analyst briefings—because these developments could affect transparency, director accountability and investor protections.
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