States and territory governments have agreed to audit what are believed to be more than 600 laws that deal with company directors’ liability.

Following a Ministerial Council for Corporations meeting in Sydney last week, the governments agreed to the audit as a first step in reforming and harmonising laws that impose personal liability on directors.

The move will be particularly appreciated by directors’ and officers’ insurers, as well as the Australian Institute of Company Directors, whose CEO John Colvin says directors who “fulfil their duties diligently and ethically… should be entitled to greater certainty of their legal position or liability exposure”.

The ministers also agreed to a number of new national principles relating to corporate liability and the circumstances under which directors may be liable for corporate fault.

These include making the corporation rather than the director responsible in the first instance for contravening a law, and confining personal criminal liability on a director for the misconduct of a corporation only in specific situations.

Financial Services and Corporate Law Minister Chris Bowen says the new agreement “demonstrates good progress on this issue”.

“There is no question that reform in this area is overdue, so it’s particularly pleasing that all jurisdictions have agreed to take the next step,” he said on Friday.