The AICD is also calling on the Government to hold a separate inquiry into Australia’s continuous
disclosure regime, as was recommended by the ALRC inquiry into class actions in January this
AICD CEO and Managing Director, Angus Armour, said the AICD has long held concerns about
Australia’s high rate of securities class actions, partly due to our unique continuous disclosure
The Myer case demonstrated that plaintiffs can bring a securities class action against companies
even when they are unable to show they relied on the relevant misstatement - known as indirect
or ‘market-based causation’.
Prior to the Myer decision, the frequency of securities class actions was already increasing,
prompting a significant deterioration in the directors and officers insurance market. Currently,
around 45 per cent of all securities class actions ever initiated in Australia are in the pipeline,
illustrating the spike over recent years.
“With litigation funding increasingly being seen as a highly lucrative investment for funders, the
AICD is concerned that class actions are less about access to justice but rather about financial
returns – which, as a result, will harm Australian companies and everyday shareholders,” Mr
The Australian class actions environment is the second most attractive to plaintiffs after the US.
Australia’s facilitative regime provides an incentive for plaintiff firms to consider initiating class
actions - with a view to settlement - whenever a market disclosure is followed by a significant
change in the share price.
Consequences for companies include economic damage to long-term shareholders; diversion
of company resources from investment opportunities to legal costs; high transaction costs on
plaintiff class members; and distracting boards away from driving growth and investment.
Media Contact: Maegen Sykes 0439 167 567
The AICD is the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society. Our membership of more than 44,000 includes directors and senior leaders from business, government and the not-for-profit sectors.