Chapter heading 1

Option one – This would be to create a positive duty on an officer to ensure a corporation complies with its duties under the model Act. That duty would be qualified by a requirement to exercise due diligence, as it applies to the responsibilities of officers (having regard to their position) within the organisation/entity. The officer would be liable for his/her own conduct or omission, not that of another person (the company). The onus of proving a failure to meet the standard of due diligence would be on the prosecution.

Option two – This would provide for liability of an officer where a failure by a corporation to comply with the provisions of the model Act is attributable to a failure on the part of the officer to meet the relevant standard (e.g. reasonable care or due diligence). The onus of proving the elements of the offence (failure to meet the standard and relationship between that failure and the breach by the company), would be on the prosecution.

Option three – This would provide for an officer to be liable where the company has contravened the model Act, unless the officer could prove:

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  the officer was not in a position to influence the behaviour of the corporation in relation to the relevant matter; or
  
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  the officer exercised reasonable (or due) diligence to ensure the corporation complied in the relevant matter.
  

28. 
    In such circumstances the onus would be on the officer to prove the elements of defence.
    
29. 
    We recommend that the first option be adopted. The provision creates a positive duty which is seen to apply immediately, rather than accountability only applying after a contravention by the company. The duty would make clear that the officer must be proactive in taking steps to ensure compliance by the company. The standard of ‘due diligence’ is well known by those who would be sufficiently directing or influencing the decisions of the company as to be defined as ‘officers’.
    
30. 
    By making the officer liable only for his or her own acts or omissions would provide a sense of control by the officer over their personal liability and a sense of fairness. These elements are each concerns expressed in relation to the ‘attributed’ liability of an officer.
    
31. 
    We, therefore, consider that the first option is more likely than the other options to ensure appropriate, proactive, steps are taken by an officer for compliance by the company with the duties of care placed on the company.