Under the Corporations Act 2001, a director must comply with certain legal obligations.

These include:

• to act in good faith in the best interests of the company and for a proper purpose
• to exercise care and diligence

In addition they must:

• be honest and careful in dealing with the company and on its behalf with others
• understand their legal obligations and make compliance with them part of their business
• keep informed about their company’s financial position and performance, ensuring their company can pay its debts on time and keeps proper financial records
• give the interests of the company, its shareholders and its creditors top priority, which includes acting in the company’s best interests (even if this may not be in their own interests)
• use information they get through their position properly and in the best interests of the company
• get professional advice or more information if they are in doubt.

As a director, they must be fully up-to-date on what their company is doing. They should:

• find out and assess for themselves how any proposed action will affect their company’s business performance, especially if it involves a lot of the company’s money
• get outside professional advice when they need more details to make an informed decision
• question managers and staff about how the business is going
• take an active part in directors’ meetings.

I have placed in bold print above the points that are doubtless particularly relevant in the Myer case.

Has any member of the Myer board not complied with the above?

If so, the result is clear cut.  

Are we getting close to a class action by disgruntled shareholders?

And can Myer survive? As others have commented, there is a knight in shining armour standing in the wings.

If I were a Myer director I would quietly disappear before this thing gets really nasty.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at [email protected] or +61 414 631 702 or +61 2 4377 1111.