I recently attended a workshop held by the Australian Institute of Company Directors that was discussing the challenges of compliance, particularly related to the continuous disclosure legal requirements of Australian companies. The intent of the requirement is to ensure continuous disclosure to ensure an equally and adequately informed stock market.

A case study was presented of various situations in which a company might have disclosure issues and when to disclose. For example, a head of agreement is at a draft stage – but commercially sensitive. Any information made public about the deal may actually kill the deal – but legally the company is required to release a disclosure statement to the share market. How do you do that appropriately?

In speaking to various directors after the event, I posed the question that the very high bar set in meeting compliance requirements might be distracting directors from the core job of creating value for shareholders and continuing to innovate. One of Perth’s leading directors agreed, and also expressed concern that high calibre people will be less likely to pursue directorships. Another indicated that it was his view that most boards worked out how to deal with compliance quickly, and were then able to get on with the job.

Unfortunately, the minority of companies that perform poorly and unethically tend to create problems for everyone else. I sense that compliance is imposing too much – however, perhaps it is a necessary evil to protect the interests of shareholders and business partners.

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