The Federal Court found today that eight directors and former executives of Centro Properties Group breached their duties when they approved financial statements for 2006-07 which did not disclose that Centro was required to repay billions of dollars of debt within a matter of months, including a $1.1 billion J.P. Morgan facility by December.

Chairman of the Australian Securities and Investments Commission (ASIC), Greg Medcraft, said that Justice Middleton’s judgment is a landmark decision in Australian corporate governance since it made clear that directors had a responsibility to apply their skills and knowledge to the financial statements of the company.

Middleton noted that the case was “not about a mere technical oversight” but that it went to the heart of whether directors of substantial publicly listed companies must “apply their minds” to their review of financial statements in order to determine information is consistent with what they know and that it does not omit material matters.

If you have any queries regarding Directors Duties in respect of Insolvency, please see our Legal Services for Directors and Officers page.