Australia’s tough laws on director liability are hurting the country’s economy and discouraging people from taking on board roles, according to a new survey.

A third of directors had turned down a seat on a company board because of the risk of personal liability, said a survey by the Australian Institute of Company Directors (AICD). And one in five had resigned a board job for that reason.

The survey found that fear of personal liability had led 65 percent of directors to take decisions they felt were “overly cautious.” Their main concern was being punished for decisions taken in good faith—three quarters said there was a “medium to high” risk of that happening.

And eight out of ten directors in the survey said they were concerned that the time their board devotes to regulatory compliance stops them focusing on corporate performance and productivity.

The AICD said the survey results highlighted the impact of personal liability rules contained in hundreds of pieces of legislation. There are more than 700 state and territory laws that impose personal liability on individual directors for corporate misconduct. In some cases the onus of proof is reversed, removing the presumption of innocence, and there are very narrow legal defenses and limited rights of appeal, it said.

“By encouraging an overly cautious approach to decision making, focusing directors’ minds excessively on risk avoidance rather than on ways to add value, and by discouraging talented people from taking up or holding directorships, these laws stifle business,” said John Colvin, AICD chief executive.

Colvin called for a broad-based defense or safe harbor for directors, to protect those who make commercial decisions in good faith.

The survey involved 623 directors from a range of sectors, including listed companies, small and medium enterprises, and not-for profit organizations.