Posted by: Chloe Kopilovic | Date: 11 September 2014
The Australian Securities and Investment Commission’s (ASIC) power to disqualify directors is not a power to be overlooked.
Under section 206F of the Corporations Act 2001 (Cth), ASIC has the power to disqualify a person from managing a corporation for up to 5 years where that person has acted as an officer of two or more companies in a 7 year period, that have been wound up and a liquidators report provided verifying the company was unable to pay its debts.
In a recent appeal to the Administrative Appeals Tribunal of Australia (Tribunal), Gabay and Anor and ASIC  AATA 425 (27 June 2014), the Tribunal upheld a disqualification imposed by ASIC under section 206F of the Corporations Act 2001 (Cth), on two directors of a series of companies in the Beacon Group.
Mr Gabay and Mr O’Neil, were disqualified on the basis that:
Mr Gabay was disqualified for a period of 18 months, and Mr O’Neil was disqualified for a period of one year.
Section 206F directs attention to whether:
The Tribunal noted that ASIC’s power to disqualify is a protective power, and is exercised by ASIC to protect the public interest.
If you have been a director or secretary of two or more companies that have been wound up and found to have been unable to pay its debts, in the past 7 years, you are at risk of disqualification.
If you are at risk of disqualification it is imperative that you are carrying out your directors duties and properly managing the business and any property of the company.
If you require more information in relation to directors duties, and what steps you should be taking to avoid disqualification, please do not hesitate to contact me.