Director liability shifted to consultant ?

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2 total messages Started by RICHARD LULIN Mon, 25 Dec 1995 00:00

#14

Author: RICHARD LULIN
Date: Mon, 25 Dec 1995 00:00

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I was just leafing thru an old Toronto Globe issue (8 dec. 95) and I noticed
a proposed draft by the Toronto Stock Exchange [TSE] (Paul Waldie, p. B1)
whereas expert and major shareholders could be prosecuted or sued in addition
to directors for misleading information.

This proposed regulation is probably intended to catch former administrators
who jump off the board once the environment gets shaky and before the
sinking of the organization, but it could have far reaching effects.

Would not this proposed legislation further burden consultant (this would
probably be tested against computer system analysts) and force them to
verify information, somewhat like C.A. (who are legally protected by a code
of ethics and the ICCA standards). Can this code force consultants to join
associations and corporations to set standards and bring accountant type
immobilism where people are hired for novelty ?

Could this be a trial balloon, soon to spread accross Canada, the States,
Europe and overseas ?

BTW: Is this witch hunting done elsewhere ?

Sorry for the crossposting but I think a joint thread might be in order;
After all even lawyers levy consulting fees :-)


Richard Lulin

Re: Director liability shifted to consultant ?

#15

Author: MCNichols
Date: Tue, 26 Dec 1995 00:00

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   > whereas expert and major shareholders could be prosecuted 
   > or sued in addition to directors for misleading information.

I don't know why they'd need a regulation for this.  At least in the US,
anyone who makes misleading information public can be sued. 

   > administrators who jump off the board once the environment 
   > gets shaky and before the sinking of the organization

Likewise, jumping off the board wouldn't protect them here - they're
liable for their acts at the time made whether they are sued/prosecuted
while still on the board or after they jump ship. 

   > C.A. (who are legally protected by a code of ethics and the 
   > ICCA standards)

I don't see how this is a protection.  As far as a code of ethics or
standards are concerned, I would guess membership in whatever organization
that subscribes to these would be used as a way to lure customers, not as
protection against liability. 

   > BTW: Is this witch hunting done elsewhere ?

I don't see how it is witch-hunting.  In US and presumably in Canada and
any other English-law-based legal system, everyone is liable for his own
acts and can be sued for damages resulting from them regardless of
licensing or lack thereof. 

Mary Nichols
California

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