Push to roll back disclosure laws
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, the institute said the next government should endorse greater consultation with business and favour deregulation.
Institute chief executive John Colvin said one of the most important areas of reform was to broaden the business judgment rule - a rule that 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," Mr Colvin said.
"Creating a new system of efficient regulation is a key element of the agenda for boosting national productivity.
"Too often new regulation is being developed on a knee-jerk reaction to a one-off event, rather than being through proper regulatory processes involving risk-based assessment, consultation and proper cost-benefit analysis."
While Mr Colvin acknowledged that financial regulation, particularly laws governing the banking sector, had helped protect Australia from the global financial crisis, he said it would not necessarily protect it 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," he said.
Dean Paatsch at Ownership Matters said winding laws back would be to the detriment of 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 institute is calling for full disclosure rules to be wound back, broader consultation with business and a shift toward deregulation. It specifically proposes broadening the business judgment rule so directors would have greater immunity from liability when decisions are deemed made in “good faith.”
Experts say rolling back disclosure laws would be a radical step backwards that could put shareholders at considerable risk. They warn that reducing directors’ accountability and weakening disclosure standards could be detrimental to everyday investors.
The business judgment rule gives a director or officer immunity from liability for company losses if their decisions were made in good faith. Broadening that rule, as proposed, would likely let directors take more risks and reduce accountability, which could increase risk for shareholders.
The corporate regulator has been focusing attention on market-sensitive information being shared at official briefings between companies and analysts, signaling scrutiny of how companies disclose material information.
Institute chief executive John Colvin argues deregulation—both slowing the growth of new rules and cutting red tape—can boost national productivity. He says regulation should be developed through proper, risk-based processes with consultation and cost-benefit analysis rather than knee‑jerk reactions.
Yes. John Colvin acknowledged that financial regulation, particularly bank rules, helped protect Australia during the global financial crisis, but he also said those protections might not guarantee safety in a future crisis.
Critics, including Dean Paatsch of Ownership Matters, say winding back disclosure laws would hurt investors. They note disclosure rules are backed by standards of due care and diligence and warn that weakening them would be risky for shareholders.
The article highlights calls for better regulatory processes as an alternative: using risk-based assessments, genuine consultation with stakeholders and proper cost-benefit analysis to design efficient regulation rather than making knee‑jerk changes or broad rollbacks.
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