Directors Duties

❖ 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

Civil penalties

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.

Disqualification

❖ S 206C(1): On application by ASIC, the court may disqualify a person from managing corporations for a period.

Compensation order

❖ 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