An analysis of the enforcement of the statutory duty of care by ASIC

The authors undertake an empirical study of all cases brought by the Australian Securities and Investments Commission (ASIC) for breach of the duty to act with care and diligence during the period from 1993 to 2017 in order to assess the extent to which ASIC is changing governance standards through litigation. We find that ASIC has been ambitious in pushing the boundaries of s 180(1) and has established a contravention in 83% of cases brought, in a wide range of factual situations. There is a strong public interest focus in s 180(1) litigation, given that the main penalty sought by ASIC, and ordered by the courts, is disqualification from managing companies. The high success rate, combined with the wide range of factual scenarios in which ASIC has established a breach, indicates that ASIC has had a significant impact on governance standards applicable to company directors and officers.