James Hardie group is one of the Australia largest asbestos manufacturers. The group had been liable for 70% of Australian asbestos consumption. However, in February 2007, ASIC had started to impose civil proceedings against James Hardie, the directors and the officers, as ASIC alleged that JHIL and both executive and non-executive had breached their statutory duty. This short research report had outlined the role of ASIC and various penalty that ASIC can impose under Corporation Act 2001. Besides that, we will also discuss the position that ASIC had held from 2004 until current date in relation to the directors of Hardie group. At last, I had provided a summary of the ASIC’s media release that had been established on 13 May 2011, and indentified the element that ASIC is hoping the High Court to uphold.
The Role of ASIC:
The Australian Security and Investment Commission (ASIC) is a commonwealth statutory corporation that set up by Australian Securities and Investments Commission Act, and it is a regulator which in charge of monitoring the Australia’s Corporation, products, markets and financial services (Lipton, Herzberg and Welsh 2012, p. 736). On the other hand, ASIC is also a commonwealth authority that is responsible for governing the Corporation Act. ASIC Act provided that ASIC owned such powers and function that endowed by the corporation legislation to ASIC. Thus, what exactly is the corporation legislation means? Under Section 5(1), they had interpreted the term ‘corporation legislation’ to mean the ASIC Act and the Corporation Act (Baxt, Finnane and Harris 2012). Besides that, ASIC also owned the power to initiate prosecution for criminal offences or apply for civil penalty orders if they believed that there’s a contravention of the law. ASIC is also able to ban a director from managing a company for a certain period if they contravened their general duties. For instance, in the case of ASIC v Stephen William Vizard , the court held that as a director of Telstra, Mr. Vizard has contravened the Corporation Act: Section 183, the duty of director to use the information in an improper purpose, and gain advantage for himself, thus, the court order pecuniary penalties and a disqualification order against Mr. Vizard (Price Waterhouse Coopers 2012). As a result of that, ASIC actually played a significant role in relation to initiate prosecution against companies directors for misconduct in order to ensure corporation and those related parties are complied with the corporation legislation. Now, let us look at the duties of a corporation’s directors under Corporation Act and what penalty can ASIC can imposed if the directors do not comply with the Corporation Act. The duties of a company’s director:
The term ‘director’ is a person who is appointed to manage control or govern the affairs of a corporation. Under Section 9 definitions, the term directors extend to a person who is not formally appointed as a director, but they act as a director or whose instruction or whishes are followed customarily (Baxt, Finnane and Harris 2012). In chapter 2D.1 of the Corporation Act, from Section 180 until Section 184, it dedicated that the principle duties of a director. They can be listed as followed: •
Section 180 stated that a director or other officer of a corporation must exercise their power and discharge the duties in a manner with care and diligence (Mclnnes Wilson Lawyers 2011). •
Section 181 declared that, a director should exercise their power and discharge their duties in good faith where it’s in the best interest of the corporation and for a proper purpose (Mclnnes Wilson Lawyers 2011). •
Section 182 stated that, a director must not improperly use their position to obtain an advantage for themselves or other or cause lesion to the company. (Armstrong Lawyers 2007). Having understood the general duties of a company’s director, we can now look at the penalties that ASIC could impose if the...
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