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Corporate Regulation Notes

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20 Corporate Regulation: ASIC role What can ASIC do?

1. Enforcement of officers' duties

2. Disqualification from managing companies

3. Corporate criminality

4. Criminal charges against directors Civil Penalty Provisions Possible remedies if breach of civil penalty provision:

* Prelim: Contravention of a civil penalty provision? S 180,181, 182, 183, (officers duties) s 209(2) (related parties rule), 588G(2) (insolvent trading)?

1. ASIC can apply for declaration (s 1317J), if court satisfied then it must make a declaration of contravention: s 1317E

2. Pecuniary penalty order: S 1317G (provided s 1317E declaration) a. If (a) declaration made; (b) contravention materially prejudices interests of corporation or scheme, or members, or materially prejudices the corporation's ability to ay its creditors; or is serious: Court may order person to pay Commonwealth up to
$200k: s 1317G(1) b. Punitive character, principally a deterrent, Capacity of D to pay is relevant, consider consequences of associated disqualification order for D, see whether order will prejudice rehabilitation of the D, size of penalty is discretion, (SEE FACTORS IN COMMENTARY ON PAGE 1397)

3. Disqualification order: s 206C (provided s 1317E declaration) (SEE 256) a. If (a) declaration made under s 1317E; and (b) court is satisfied disqualification is just, Court can disqualify person from managing corporations for a period that court considers appropriate: s 206C(1). b. Factors Disqualification orders designed to safeguard public interest and protect public from harmful use of corporate structure from use contrary to commercial standards:Adler. i. Will consider the character of offenders, nature of breaches, whether any honesty and competence, hardship to offenders, whether defendants have tried to reay amounts misappropriated. ii. Eg in adler adler disqualified from managing own family cos

4. Compensation orders: s 1317H (even where no declaration of contravention of a civil penalty) - Asic or corporation can apply (s 1317J) a. Rule: Court can order person to compensate a corporation for damge suffered by the corp if: (a) the person contravened a corp civil penalty provision in relation to the corp; and (b) the damage resulted from the contravention. (Note that 'damage' suffered' includes profits made by any person resulting from contravention): s 1317H

5. Relief from liability for contravention: s 1317S a. If eligible proceedings brought against a person, and appears to court that person has or may have contravened civil penalty, but: (i) acted honestly; and (ii) having regard to all circumstances person ought fairly to be excused for the contravention: s 1317S(2), court can relieve person either wholly or partly from liability to which person would otherwise be subject, or that might otherwise be imposed on person. b. Eg - if s 588G(2) Relevant matters for court in determining whether to fairly excuse person: any action person took with view to appointing administrator, when action taken and result: s 1317S(3)

6. Injunctions: S 1324 (on application of ASIC, or person whose interests have been or would be affected by conduct) a. Req 1# where person is engaging or is proposing to engage in conduct that constitutes

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