Posted by: Angelo Venardos | Date: 25 August 2015
ASIC has the power to disqualify a person from managing a company for up to 5 years where that person has, within the previous 7 years, been an officer of two or more companies that have been wound up and deemed insolvent by a liquidator.
A person will be automatically disqualified for being convicted of certain offences listed under the Corporations Act, being an undischarged bankrupt, not complying with the terms of a personal insolvency agreement or as the result of a court order.
ASIC may in its discretion, permit a person it has previously disqualified to manage a particular company. They may grant this permission subject to certain conditions and exceptions.
Similarly, where a person has been disqualified by way of court order, the person may apply to the Court for leave to manage a particular company or to manage companies in general.
ASIC maintains a record of persons who are disqualified and conducts investigations to ensure the disqualification is being complied with.
A disqualified person will be committing an offence where:
There is a fine line between what ASIC deems as merely assisting a company, and what is seen as actively running a company in a ‘puppet master’ like capacity. A disqualified person should extensively weigh up the risks when deciding whether or not to assist or provide advice to a company in its operations whilst disqualified; the Commonwealth may prosecute and impose heavy fines for contravening a disqualification order.
Whilst ideally it would be safest not to be involved in a company at all, where this is not possible, the disqualified person should, at the very least, isolate themselves from any acts which might be deemed management related such as:
If you have any questions relating to running or being involved with a company whilst disqualified, please don’t hesitate to contact me.