Security of company books: not just a privacy issue

Security of company records is usually discussed in connection with privacy.

But security is actually an obligation of directors and officers under section 180 of the Corporations Act, the duty of care and diligence.

Section 1306(3) Corporations Act states that "A corporation must take all reasonable precautions … for guarding against damage to, destruction of or falsification of or in, and for discovery of falsification of or in, any book or part of a book required by this Act to be kept or
prepared by the corporation."

This makes it a duty of the directors to consider fire protection, anti-theft and other security measures of all their records, whether physical or electronic.

Whatever they decide, they need to be able to justify the decision under the business judgment rule in section 180(2).

Does your company have a records security policy?

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