What is the role of ASIC in misconduct by a company or company directors or officers?

Company directors and officers must comply with various laws in Australia like laws that are related to workplace relations, work health and safety, environmental issues and taxation.

There are matters where ASIC is responsible for the misconduct relating to activities of company directors and officers.ASIC is responsible for administering 11 pieces of legislation including the Corporations Act 2001 and the Australian Securities and Investments Act 2001. Under the Corporations Act directors and company officers are responsible to act in the best interest of the company and to prevent insolvent trading and also required to perform other duties.

The various matters for which ASIC is responsible for matters relating to company directors and officers include:

·         failure to seek approval for a related party transaction

·         misuse of the company officer's position to gain an advantage for themselves

·         conduct before entering external administration aimed at defeating the interest of creditors

·         misrepresentation about the company's financial position

·         acting as a director of a company while bankrupt or disqualified.

There are areas where ASIC does not get involved in the misconduct conducted by company directors or company officers.e.g if there is a misconduct relating to breach of law another government agency or department is enforcing it does not always mean that they have breached their duties under the Corporations Act.

Sometimes a company has breached their duties under a law imposed by another government agency or department and this does not always mean that the directors or officeholders have breached a law under the Corporations Act . The extent of the directors and officeholders breach of Corporations Act regarding these situations will depend on the circumstances of each case.

ASICmay receive reports from other government departments or agencies about thesuspected breach of laws by company officeholders or directors. ASIC will only get involved in these situations if their involvement will have a greater regulatory impact on the market and will benefit the public at large. Before getting involved ASIC will evaluate the actions taken by the other government departments and agencies and the results of their actions.

Any action taken by ASIC based on the reports received from these agencies or from the members of the public will generally be to benefit the public and the market or put a ban on the directors from managing companies.