Australian court case on directors’ duties could have implications for Singapore too

AN ONGOING case in Australia against directors who allegedly failed in their oversight of potential risks could have implications for independent directors in Singapore too. The bottom line is that independent directors cannot simply rely on the assessments of others, but must engage in active scrutiny and questioning of management – or risk being in breach of their duties.

In December 2022, the Australian Securities and Investments Commission (ASIC) announced that it had commenced civil proceedings against the former board and senior management of The Star Entertainment Group. Listed on the Australian Stock Exchange (ASX), Star operates several casinos and resorts in Australia.

ASIC alleged that the directors had breached their duties pursuant to section 180 of the Australian Corporations Act 2001. Under the rule, directors are required to exercise their powers and discharge their duties with the same degree of care and diligence that a “reasonable person” would.