1. IntroductionIn recent decades, corporate governance has attracted worldwide attention due to its exposed scandals, and even criminal activities of corporate executives in some cases. (e.g. the bankruptcy of Enron Corporation). As we all know, an efficient and effective corporate governance regime should include provisions for civil or criminal action against corporate executives who engage in monkey business or illegal acts, but what is the functional method for 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, the shareholders. It encompasses: “the framework of rules, relationships, systems and processes within and through which authority is exercised and controlled within businesses. It encompasses the mechanisms by which companies, and those who control them, are held accountable. » Thus, corporate governance is not simply the product of government regulation. Companies have a natural incentive to establish governance procedures to demonstrate their good faith to investors, in order to attract capital. Directors are also incentivized to provide good performance in order to maintain their professional reputation. 2) What is efficient and effective corporate governance? Good corporate governance promotes investor confidence, which is crucial for the ability of businesses to compete for capital. Effective and efficient corporate governance must meet criteria such as board accountability, financial...... middle of paper ......e must disclose information specified under the Section 300A which includes general policies for determining the nature and amounts. remuneration, the relationship between this policy and the performance of the company and details of the nature and amount of each element of the remuneration packages 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 their duty of care? What is the rule of judgment?I. What happens if a director breaches their duty of care? The legal obligations that trigger the civil penalty provisions of prudence and diligence (s. 180), if violated, the court may impose the following orders: 1) a monetary fine of up to $200,000 (s 1317G)2) exclusion from management (s 206C)3) Compensation for loss suffered (s 1317H))