Executive officers (EOs), which include company directors, are exposed to criminal liability if their company is found guilty of a breach of its obligations under Chain of Responsibility (CoR) laws. Here we examine when this liability would apply.There are two strands to that liability:1.Under s 636(1) of the heavy vehicle national law (HVNL), an EO will be liable if he or she “knowingly authorised or permitted” the conduct.2.Under s 636(2), an EO will be liable if he or she knew or ought reasonably to have known of the conduct, or that there was substantial risk that the offence would have been committed.Section 636(3) provides that it is a defence under s 636(2) that the EO exercised ‘reasonable diligence’ to comply with the provision, or was not in a position to influence the conduct of the corporation in relation to the offence.The company does not need to have been successfully prosecuted before an EO can be prosecuted.So what does this mean in practice?First, all EOs need to exercise (at least) reasonable diligence to ensure that their business is compliant with CoR laws.While the ‘reasonable diligence’ defence is only available to a charge under sub-section (2), it is difficult to see how an EO could knowingly authorise or permit conduct in breach of CoR if at the same time they were exercising reasonable diligence to comply.In that case, what amounts to reasonable diligence?In that case, what amounts to reasonable diligence?- put in place a CoR compliance policy; and
- monitor that policy.
While no cases have turned on this question in the past, these two steps (in our view) would satisfy the reasonable diligence test.Having such measures in place should significantly reduce the likelihood of CoR breaches occurring.That is not to say that lesser steps might not amount to reasonable diligenceThat is not to say that lesser steps might not amount to reasonable diligence. Being able to prove at least some awareness of your CoR obligations and having sought to address those in practice may satisfy the reasonable diligence requirement. But the best way to protect yourself from personal liability will be to produce minutes of a board meeting adopting a CoR compliance policy and some evidence that that policy has been applied.There are two further things to bear in mind. The first is that some CoR offences relate to business practices. For example, under s 204 an employer, prime contractor and operator will be liable if they have failed to take all reasonable steps to ensure that their business practices will not cause the driver to exceed a speed limit.Under s 205, an employer will be liable if they allow a driver to drive before they have complied with s 204.In other words, it is not necessary for a driver to be caught speeding before the company might be liable if it cannot demonstrate that it has taken all reasonable steps to ensure that their business practices won’t cause speeding to begin with.This in turn means that an EO of that employer is potentially liable if he or she has not taken steps to ensure that the company’s business practices will not cause speeding.* A version of this article was originally published in CoR Adviser. This article is © 2015 Portner Press Pty Ltd and has been reproduced with permission of Portner Press.Geoff Farnsworth, PartnerDanella Wilmshurst, PartnerThe information in this Article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 【We provide excellent expert advice to businesses wishing to invest in Australia.】Our previous news releases for Chinese investors include the following topics:
- Business set up in Australia, business structures, company administration, etc.
- Background information of Australia, including Australian government, legal system, and business structures, etc.
- Laws and regulations in various common areas, including protection of technology and intellectual property, anti-trust and consumer law, contract law, business migration, real property, public takeovers, and electronic commerce etc.
- Professional industrial updates and insights, such as regulation on foreign investment.
【政策】ASIC发布新法信息指南,将公平合同条款保护扩展至小企业合同 
The Crowdfunding Bill: changing equity financing for start-ups 
