Directors face revolt by shareholders

"I think shareholders will have to look very closely at these directors to look at their tenure on other boards," Ann Byrne, chief executive of the Australian Council of Super Investors, which provides advice to superannuation funds that together control more than $300 billion, said.

Ms Byrne said the Centro board had failed to look after shareholders' interests.

"Therefore, as a representative of our funds, we have to question whether or not these particular directors will do that on any other company where they are, in fact, a member of the board."

Centro said Jim Hall and Paul Cooper, two of the directors who the Federal Court yesterday declared breached the Corporations Act when approving company accounts in September 2007, would remain on its board.

Mr Hall is also a director of Paperlinx, Alesco and ConnectEast.

The other Centro directors declared to have breached the Corporations Act - chairman Brian Healey, chief executive Andrew Scott, Sam Kavourakis, Graham Goldie and Peter Wilkinson - are no longer with the company.

Ms Byrne said the $30,000 civil penalty imposed on Mr Scott was "much less than what he would have got in director's fees for one year" and she would have liked to see the non-executive directors given "something greater than bad publicity as a penalty". She said: "I think it sends a message to investors that in times when there clearly has been a lack of oversight, the only people who must suffer a financial penalty are, in fact, the investors."

The Australian Shareholders' Association chief executive, Vas Kolesnikoff, said "where the people see highly paid executives and directors found guilty of breaking the law, but no penalty is imposed, then is it no wonder that the legal community is seen to be out of touch".

The Australian Institute of Company Directors said the decision raised important issues about the degree to which directors could rely on the advice of management and external advisors.