1. IntroductionIn recent decades, corporate governance has attracted worldwide attention due to the scandals exposed and, in some cases, also due to the criminal activity of corporate directors. (e.g. the bankruptcy of Enron Corporation). As we all know, an efficient and effective corporate governance regime should include provisions for the civil or criminal prosecution of corporate directors who conduct monkey business or illegal acts, but what is the functional method to avoid such situations? This article examines the importance of directors' duty of care in achieving this objective.2. What is corporate governance? What is efficient and effective corporate governance?1) What is corporate governance? Corporate governance refers to the set of institutions and practices designed to ensure that managers and directors act in the best interests of the company and, ultimately, shareholders. It includes: “the framework of rules, relationships, systems and processes within and through which authority is exercised and controlled within societies. It includes the mechanisms by which companies, and those in control of them, are held to account.” Therefore corporate governance is not simply a product of government regulation. Companies have inherent incentives to establish governance procedures to demonstrate their good faith to investors in order to attract capital. Directors are also incentivized to deliver good performance to maintain their professional reputation. 2) What is efficient and effective corporate governance? Good corporate governance promotes investor confidence, which is critical to companies' ability to compete for capital. Efficient and effective corporate governance should function well with respect to criteria such as board accountability, finance... middle of paper... must disclose the information specified in section 300A which includes general policies for determining the nature and amounts of remuneration, the relationship between that policy and the performance of the company and the details of the nature and amount of each element of the remuneration package of each director and the five highest paid executives of the company. Disclosure of the remuneration policy is a fundamental requirement for remuneration reporting.4. What happens if a director breaches his duty of care? What is the judgment rule?I. What happens if a director breaches his duty of care? The statutory duties which trigger the civil criminal provisions of care and diligence (s 180), if they have been breached, the court may impose the following orders: 1) a fine of up to $200,000 (s 1317G) 2) Disqualification from managing (s 206C)3) Compensation for damage suffered (s 1317H))