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TODAY'S LEGAL NEWS
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| ARTICLES AND ALERTS |
DOCUMENT MANAGEMENT POLICIES: RATIONALE AND REQUIREMENTS
Author: Katrina Reye
Publish Date: February 1, 2007
The destruction of documents is a sensitive issue, particularly when a dispute arises down the track.
The obligations of organisations to retain documents relevant to future litigation have been addressed recently in several cases, most recently by Federal Court judge Justice Sackville in the high profile C7 case.
The indication is that the Courts are becoming less likely to accept that failure to retain documents is excusable on the basis that no litigation was "anticipated". Specifically the Courts have shown that they are concerned about a systematic process of removal of documents.
This concern is also starting to be reflected in the legislation. For example, the recently enacted Crimes (Document Destruction) Act 2006 (Vic) has made it a criminal offence to destroy documents that are reasonably likely to be required in legal proceedings in
These cases and pieces of legislation indicate that organisations must take care in the types of documents they retain and those they allow to be destroyed or disposed of. One important step in managing your paper trail is to have a Document Management Policy.
Why is it important to have a Document Management Policy?
- The Corporations Act requires you to keep some records for 7 years;
- There are specific tax obligations relating to retaining records;
- Organisations with US operations or links may have obligations relating to document retention under the US Sarbanes-Oxley Act;
- Where there is anticipation of possible litigation (even before notice of commencement of proceedings) all records potentially relevant to that litigation must be retained.
- If you have destroyed documents relevant to litigation the court may assume those documents would have been damaging to your case.
A formal and comprehensive Document Management Policy ensures not only that your organisation benefits by better managing the ever increasing volume of electronic and paper records, but can also reduce the risks set out above by setting out a system that ensures the safe and efficient handling and retention of all records.
What issues should your Document Management Policy consider ?
The Policy should cover all issues concerning the retention and destruction of all documents, including electronic records. It is necessary to detail:
- the documents to which the Policy applies;
- the system by which the organisation retains documents, which should ensure that all security requirements are satisfied, provide for the backing up of documents, and detail the procedures implemented to ensure the authenticity and integrity of all documents;
- the time period for which documents must be held. In order to complete this section you need to consider what laws apply to your organisation. There are a number of laws that could apply such as the Corporations Act, the US Sarbanes-Oxley Act, the Income Tax Assessment Act and the Privacy Act. You typically need to retain a document for 7-12 years depending on the document;
- the reasons for decisions relating to the retention and destruction of documents (for example, specific retention legislation, corporate governance requirements, possible litigation, and general business continuity necessities); and
- who is responsible for the monitoring of adherence to the Policy.
In addition, the policy should provide for the following:
- The training and familiarisation of all employees with the Document Management Policy to ensure that your organisation adopts a culture of document retention that satisfies the requirements of your policy; and
- A regular review, and if necessary, updating of, the Document Management Policy.
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