LAWS3100 Study Guide - Final Guide: Trading While Insolvent
Lecture 8: Consequences of breach of duty (chapter 15)
1. Enforcement of officers’ statutory duties by ASIC
2. Company’s remedies for breaches of officers’ general law and statutory duties
3. Relief from liability for breach of duty
1. Enforcement of officers’ statutory duties by ASIC
Statutory duties – ASIC enforcement, company remedies
General law duties – company enforces
‘Company’ normally means ‘board’
If several directors are alleged to have breached their duties, sometimes a member can bring an action
(Chapter 16)
Members may have separate statutory remedies on the facts (Chapter 16)
Statutory duties by ASIC
ASIC has a range of powers to enforce the Corporations Act
- Penalty notices for contravention of prescribed offences requiring them to pay a penalty ($900)
within a specified time (s113 of the Corp Act)
An example of a prescribed offense (Section 169 outlines the matters that must be kept in a company’s
register of members. These include the name and address of each member, and if the company has share
capaital, the # and class of shares held by each member.
If a company does not have a register of members, they have breached s168 since s168 requires all
companies to establish and maintain a register of members
- Standing to commence proceedings seeking orders from the Court (including under
s1323)
- Banning orders
- Enforceable undertakings
Civil penalties provisions?
Include directors’ duties in ss180–183, duty to avoid insolvent trading in s588G and breach of Chapter 2E
of the Corporations Act
Consequences of a contravention are set out in Pt 9.4B of the Act
Only ASIC may apply for a declaration of contravention
Following declaration of contravention, court can make these orders on ASIC’s application:
Pecuniary penalty up to $200,000
Disqualification order (s206C)
Company or ASIC may apply for a compensation order (s1317H)
Civil standard of proof, rules of evidence and procedure
Criminal penalties?
A contravention of a statutory duty may be so serious that ASIC believes a more substantla penalthy
than a civil penalty should be imposed on the person
Section 184 makes it a criminal offence to breach good faith, use of position and use of information duties if
the person is reckless or intentionally dishonest
Dishonest insolvent trading is also an offence (s588G(3))
Criminal burden of proof and rules – up to 2,000 penalty units ($340,000 to $360,000) or up to 5 years gaol,
or both
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
If several directors are alleged to have breached their duties, sometimes a member can bring an action (chapter 16) Members may have separate statutory remedies on the facts (chapter 16) Asic has a range of powers to enforce the corporations act. Penalty notices for contravention of prescribed offences requiring them to pay a penalty () within a speci ed time (s113 of the corp act) An example of a prescribed offense (section 169 outlines the matters that must be kept in a company"s register of members. These include the name and address of each member, and if the company has share capaital, the # and class of shares held by each member. If a company does not have a register of members, they have breached s168 since s168 requires all companies to establish and maintain a register of members. Standing to commence proceedings seeking orders from the court (including under s1323)
