Call for reforms to full disclosure

The Australian Institute of Company Directors wants full disclosure rules wound back, calling for reforms that would see company directors take more risks and be less accountable under the law.

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."