Helping to create better directors

THE ill wind that has blown through the wrecked houses of HIH and One.Tel has certainly blown the Australian Institute of Company Directors some good.

Demand for the AICD’s services has skyrocketed as the corporate collapses sheeted home the importance of directors’ responsibilities.

The group has experienced its largest membership gain in its more than 30-year history.

And it believes its 15,000-strong membership is but a drop in the ocean of the potential market.

Some of its courses, including one version of its flagship Company Director’s Program, have been sold out.

AICD chief executive officer John Hall described the huge demand spike as healthy.

“But that’s what we’re here for,” Mr Hall said.

“There has been so much publicity recently about directors’ roles and responsibilities.

“We’re looking to see if we can increase the numbers we can fit into some of our courses to cope with the increased demand.”

He said the six-day in-residence version of the Company Directors’ Program had been sold out.

The course is also offered via correspondence or through a tutorial program.

“We can cope more easily with an increase in demand for the correspondence or tutorial programs,” Mr Hall said.

“The in-residence program is more difficult because it requires sourcing accommodation.”

He said the recent One.Tel and HIH sagas would prove problematic for directors because there were parts of both stories that were yet to be revealed.

“The inquiries into those two companies have only just begun,” Mr Hall said.

But one of the key questions being asked in the inquiries is whether the companies were trading while insolvent.

Insolvent trading is one of the big concerns for company directors.

If the company is found to have traded while insolvent, the directors can be found personally liable for any losses incurred.

One of the biggest problems companies face is in keeping proper records. Without the right documentation, a business can be trading while insolvent and not be aware of it.

Another risk facing businesses comes from failing to keep track of tax liabilities.

Receipt of a 222AOE notice means the business has 14 days to respond or the Australian Tax Office will be coming after its money.

Any director who is in place when that notice arrives can be found liable for the tax owing. This can prove a trap for some directors who have just been appointed to the board.

Because the notice does not come on the same blue paper most other tax notices are printed on, it can easily be missed.

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