Corporate Governance, Business Judgement and the Professionalism of Directors 6 Corporate & Business Law Journal 1993-1994

6 Corp. & Bus. L.J. 1 (1993-1994)
Corporate Governance, Business Judgement and the Professionalism of Directors

handle is hein.journals/candbul6 and id is 5 raw text is: CORPORATE GOVERNANCE,
BUSINESS JUDGEMENT AND
THE PROFESSIONALISM
OF DIRECTORS
by Professor John H Farrar*
United States of America has recently become a fashionable idea
T HE concept of Corporate Governance which emanates from the
in Australia. Like most fashionable ideas it is remarkably
imprecise. In fact, a number of ideas are in circulation under this
heading and a number of interests are staking their claims to recognition in
the administration of corporate affairs. Although many ideas about
corporate governance have an international quality, each country has
approached it against a background of its own distinctive culture. In
Australia, one sometimes has the impression that this lies somewhat
uneasily between the culture of Ned Kelly and that of his gaoler.
If we adopt the position that corporate governance is about the legitimacy
of corporate power, corporate accountability and the standards by which
the corporation is to be governed and by whom,' it is obvious that the
concept transcends legal standards and liability, perhaps reflecting the fact
that law deals with a minimal morality of obligation rather than a morality
of aspiration.
After a period of prolifigacy, the post 1987 crash hysteria and the
unravelling of many corporate collapses, the inevitable tendency of the
public and of politicians has been to over react.2 Indicative of this over
reaction were some of the draft provisions of the Corporate Law Reform
Bill 1992 (Cth). Fortunately the Commonwealth Attorney-General had the
* LLM (London), Ph D (Bristol), Barrister of the High Courts of Australia and
New Zealand. Harold Ford Professor of Commercial Law, Associate Dean
(Research and Graduate Studies) at the University of Melbourne and Adjunct
Professor of Law at Bond University, Queensland.
This article is based on a paper given as the Finlaysons Annual Lecture in
Commercial Law 1992, Law School, University of Adelaide, 22 October 1992.
1 This argument is advanced in Worthy & Neuschel, Emerging Issues in
Corporate Governance (Northwestern University Press, Chicago 1983) p4.
2 This point has been well made by Dr William Beerworth, Amendment of
Corporations Law: Reform or Red Tape (Address to the Sydney Institute, 20
April 1993).

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