The Significance of the Decision

The significance of the stopping point Is this anything more than a case of clear mistakes? rightness Middleton has non expressly set out to restate the law. In his reasons, the judge relies on longstanding statements of directors duties. The Centro decision is, however, a main(prenominal) illustration of how those statements of principle may be applied in a particular case. A threshold issue in assessing the significance of the decision is whether the particular circumstances are such(prenominal) that it gives limited guidance about how a director ought to acuity in other circumstances. The judge acknowledges that ASICs case was that the errors in the CNP and erudite emotion 2007 Annual Reports were so obvious that the conclusion that they had been derelict was inescapable. This is referred to by the judge as the Blind Freddy proposition. The directors failed to see the obvious errors besides because they relied but on the processes which CNP and CER had in mili tary position and on their advisers. no(prenominal) stood back, armed with his own knowledge, and looked at and considered for himself the monetary statements. Looked at in this way, the Centro decision may be little more than a reminder of the need for directors to read, understand and focus upon documents which they approve. That much is non controversial.

What is likely to stir debate, however, is the court of justices rejection of defences raised by the directors which exponent normally be considered compelling. To what extent can directors rely on heed and away advisers? A significant feature of th e Centro decision is that the court proceede! d on the basis that the directors were reasonably entitled to maneuver belief on the processes which CNP and CER had put in habitation for the purposes of ensuring that the financial statements were accurate and complied with the accounting standards. In particular, the directors were entitled to place just trust and confidence in the competence of the chief financial officer and the external auditors. The court accepted that...If you want to get a replete(p) essay, order it on our website: OrderCustomPaper.com

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