ASIC is committed to protecting the interests of small business and acting against directors who fail to properly manage their companies and assist liquidators after a company collapse. ASIC does this by taking administrative and court action for breaches of duties. These actions result in directors being disqualified and convicted, and protect the wider public, employees and other small businesses against the future mismanagement of companies.
During the period 1 July to 30 September 2024:
ASIC prosecuted 68 individuals who failed to assist liquidators following the collapse of their company and disqualified three company directors, including two for the maximum period of five years
the Commonwealth Director of Public Prosecutions (CDPP) continued prosecutions against two directors for dishonest conduct relating to company money following investigations by ASIC.
These criminal prosecutions and administrative actions were taken against directors in relation to:
tax avoidance and failing to lodge tax returns
failing to pay employee entitlements including wages and superannuation
failing to maintain proper books and records, and
conduct that was not in the best interests of the company including illegal phoenix activity and insolvent trading.
The failure of these directors to meet their statutory obligations adversely impacted many small business creditors across a range of industries including construction, property development, transport, warehousing and freight. These failures left many creditors unpaid including other small businesses, employees, and the Australian Taxation Office (ATO).
Company directors should obtain trusted professional advice if they are uncertain about their legal obligations or have concerns about their company’s ability to continue to trade and pay their debts. Find out more on professional advice.
Director disqualifications
In addition to the recent five-year disqualification periods handed down to Richard Sparreboom (refer 24-178MR) and Graeme Doble (refer 24-214MR), ASIC also disqualified VIC Director Benjamin Anderson for a four year period following his involvement in seven failed companies that owed a combined total of $35,610,506. Mr Anderson’s companies were concerned with construction, property development and project management.
ASIC found that Mr Anderson acted improperly allowing one company, Australian Public Custodian Ltd (APC) to trade while insolvent and to have undocumented and unsecured loans between APC and related parties. ASIC also found Mr Anderson failed to maintain proper books and records and to comply with statutory lodgements, including income tax returns with the ATO.
In disqualifying these directors, ASIC relied on supplementary reports lodged by certain liquidators after ASIC approved funding from the Assetless Administration Fund. The liquidators of Mr Anderson’s companies were Glenn Spooner of Cor Cordis, Robert Ditrich of Price Waterhouse Cooper and Liam Bellamby of RRI Advisory were the liquidators.
Directors may be disqualified from managing a corporation for a maximum of five years. They are listed on ASIC’s public banned and disqualified persons register and can face criminal charges if they don’t comply with the disqualification order. Directors can seek a review of ASIC’s decision by the Administrative Review Tribunal.
Criminal prosecutions
On 30 July 2024, NSW Director Mark Stevens appeared in the Downing Centre Local Court and was formerly charged with dishonestly causing a $110,000 payable to his company MWCLMS Pty Ltd (in Liquidation) to be redirected to another company Australasian Justice Services Pty Ltd (in Liquidation) contrary to section 192E(1)(b) of the Crimes Act 1900 (NSW) (refer 24-168MR).
On 16 September 2024, the summary trial of NSW Director Tim Xenos, former CEO and director of FAL Healthy Beverages Pty Ltd, commenced in Sydney. Mr Xenos has pleaded not guilty to charges that he was managing a company whilst disqualified, and dishonestly using his position as FAL Healthy Beverages CEO by inappropriately using approximately $170,826.95 in company funds to pay legal fees and other costs to annul his bankruptcy (refer 21-268MR). The trial concluded on 4 October 2024, and the Magistrate has reserved their decision.
Assistance for external administration
Registered liquidators can request assistance from ASIC in circumstances when directors, officers and individuals related to an entity in external administration fail to comply with legislative requirements, including the failure to provide books and records to the liquidator and the failure to complete a report on company activities and property (ROCAP).
During the period 1 July to 30 September 2024, ASIC successfully prosecuted 68 defendants for 123 offences for failing to assist liquidators, which resulted in fines of over $315,000. Proving the ROCAP as well as all company books and records, allows the liquidator to obtain better information about events leading up to their appointment and assist the liquidator in their investigations, asset recoveries, and complying with their obligations to report to creditors and to ASIC.
