❖ S 9: “Officer” includes directors, secretaries, receivers, administrators, liquidators, administrating trustees. ❖ S 9: “Director” includes shadow & de facto directors.
enforcement of directors’ duties
enforcement of statutory duties
Who may apply for a Declaration or Order?
❖ S 1317J(1): ASIC may apply for a declaration of contravention, a pecuniary penalty order or a compensation order. ❖ S 1317J(2): The company may apply for a compensation order. ❖ S 1317J(3): The company may intervene in ASIC’s application for a declaration of contravention or a pecuniary penalty order, and be heard on all matters other than whether the declaration or order should be made.
Declaration of contravention
❖ S 1317E(1): The court must make a declaration of contravention if it is satisfied that a person has contravened a civil penalty provision: ➢ (a) s 180(1), s 181(1)-(2), s 182(1)-(2), s 183(1)-(2) (directors’ duties); ➢ (b) s 209(2) (related party rules);
➢ (c) s 254L(2), s 256D(3), s 259F(2), s 260D(2) (share capital transactions); ➢ (e) s 588G(2) (insolvent trading).
❖ Once the declaration is made, ASIC may apply for:
➢ A pecuniary penalty order of up to $200,000 (s 1317G);
➢ A disqualification order (s 206C).
Pecuniary penalty order
❖ S 1317G(1): A court may order (the contravener) to pay the Cth a pecuniary penalty of up to $200,000 if the contravention: ➢ (b)(i) materially prejudices the interests of the company or its members; ➢ (b)(ii) materially prejudices the company’s ability to pay its creditors; or ➢ (b)(iii) is serious.
❖ S 1317G(2): The penalty is a civil debt payable to ASIC.
❖ S 206C(1): On application by ASIC, the court may disqualify a person from managing corporations for a period.
❖ S 1317H(1): A court may order a person who has contravened a civil penalty provision to compensate the company for damage suffered by the company as a result of the contravention. ❖ S 1317H(2): “Damage” includes profits made by (the contravener) resulting from the contravention.
❖ S 184(1): Directors (or other officers) commit an offence if they are reckless or intentionally dishonest in their breach of s 181. ❖ S 184(2): Directors (or other officers or employees) commit an offence if they breach s 182 and: ➢ (a) intended to gain advantage for themselves or someone else, or cause detriment to the company; or ➢ (b) was reckless as to whether the use of position may result in themselves or someone else gainin an advantage, or in causing detriment to the company. ❖ S 184(3): Directors (or other officers or employees) commit an offence if they breach s 183 and: ➢ (a) intended to gain advantage for themselves or someone else, or cause detriment to the company; or ➢ (b) was reckless as to whether the use of information may result in themselves or someone else gaining an advantage, or in causing detriment to the company.
❖ Sch 3: Commission of a s 184 offence gives rise to a maximum penalty of $200,000 or imprisonment for 5 years, or both. ❖ S 206B(1): A person convicted of a s 184 offence is automatically disqualified from managing corporations for 5 years.
Criminal proceedings after civil proceedings
❖ S 1317P: Criminal proceedings may be started against a person for conduct constituting a contravention of a civil penalty provision, even if civil penalties have been imposed on him. ❖ S 1317Q: However, evidence given by a person in civil penalty proceedings is not admissible in criminal proceedings against that person.
Criminal proceedings during civil proceedings
❖ S 1317N: Proceedings for a declaration of contravention or pecuniary penalty order against a person are stayed, if criminal proceedings are started against that person for substantially the same conduct.
Civil proceedings after criminal proceedings
❖ S 1317M: A court must not make a...
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