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Media release

Australian directors and boards at cross roads - Mallesons launches report on key challenges facing boards and directors

Mallesons Stephen Jaques has launched its inaugural report on the key issues and challenges facing boards and directors in Australia. 125 directors from more than 300 organisations across multiple sectors were surveyed for the report.

Directions 2011 highlights a number of issues surrounding board composition, the role of boards and directors, the regulatory landscape and stakeholder engagement.

M&A partner, Meredith Paynter, said that emerging from the global financial crisis, boards and directors are facing more issues and challenges than ever before.

"Australian directors are in the firing line. Increasing red tape, the risk of personal liability and the ‘gap’ between what is expected of directors and what they actually do, are some of the key challenges that directors are currently facing.

"Consequently, we could see qualified people opting out of director roles," she said.

Ms Paynter pointed to balancing risk taking and risk management as one of the key issues identified in the firm’s report.

“74% of respondents indicated they had seen significant upgrades to internal risk management in 2010. However, as noted in our report, there needs to be a balance between risk management and oversight, and calculated risk taking to create shareholder value,” she said.

“Another significant issue highlighted in our report, is the need for a deeper safe harbour for directors. 46% of respondents said that introducing a broader business judgment defence would make a significant improvement to their role,” Ms Paynter added.

On diversity, 55% of respondents believe there is a lack of diversity on boards generally, but 75% said their company had made appointments to increase diversity in 2010.

"Many of our survey respondents said diversity on boards is important because it helps promote robust debate and decision-making, and to counteract ‘group think’, but most don't like quotas because it risks detracting from merit-based appointments. 62% of respondents said they would not support measures beyond ASX’s ‘if not, why not’ diversity recommendations to improve board diversity," said Ms Paynter.

As for annual meetings, 64% of respondents think they should be revised, with 50% in favour of online shareholder voting.

Although 42% of survey respondents said boards have become too risk averse when pursuing M&A opportunities, 2/3 of respondents anticipate their companies will be involved in M&A activity in 2011.

Mallesons' Directions 2011 report was launched in the firm's Sydney office on the evening of February 15 and will be launched in the firm's Melbourne office on the evening of February 16. To read the full report, please click here.

Media enquiries:

Elle Lowe
Senior Manager, Corporate Affairs
T +61 2 9296 3730
M +61 424 168 080​