An Empirical Analysis of Public Enforcement of Directors’ Duties in Australia: Preliminary Findings

36 Pages Posted: 18 Apr 2016 Last revised: 19 Apr 2016

See all articles by Jasper Hedges

Jasper Hedges

Australian National University, Research School of Social Sciences

Helen Louise Bird

Melbourne Law School

George Gilligan

University of Melbourne - Centre for Corporate Law

Andrew Godwin

Melbourne Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: March 4, 2016

Abstract

This paper presents the preliminary findings of an empirical analysis of sanctions imposed in proceedings brought by Australian Securities and Investments Commission (ASIC) and the Commonwealth Director of Public Prosecutions (CDPP) for contraventions of the directors’ duties provisions of the Corporations Act 2001 (Cth) and its predecessor, the Corporations Act 1989 (Cth), from 1 January 2005 to 31 December 2014. The preliminary findings presented in this paper indicate that criminal enforcement was more prevalent than civil enforcement and there was a significant emphasis on incapacitative sanctions such as prison sentences and management disqualification orders. Monetary sanctions were less frequently imposed and tended to be of a low magnitude relative to the statutory maximum sanctions. Criminal and civil enforcement had similarly high success rates and the civil enforcement process was only slightly faster than the criminal process, suggesting that criminal enforcement is as effective as civil enforcement from a procedural perspective. In sum, both ASIC and the CDPP play a significant role in enforcement of directors’ duties and there is a strong focus on enforcement via incapacitation.

Keywords: directors' duties; enforcement; sanctions

JEL Classification: G18; G28; G38; K22; K41; K42

Suggested Citation

Hedges, Jasper and Bird, Helen Louise and Gilligan, George and Godwin, Andrew and Ramsay, Ian, An Empirical Analysis of Public Enforcement of Directors’ Duties in Australia: Preliminary Findings (March 4, 2016). CIFR Paper No. 105/2016. Available at SSRN: https://ssrn.com/abstract=2766132 or http://dx.doi.org/10.2139/ssrn.2766132

Jasper Hedges

Australian National University, Research School of Social Sciences ( email )

Canberra
Australia

HOME PAGE: http://www.anu.edu.au

Helen Louise Bird

Melbourne Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

George Gilligan

University of Melbourne - Centre for Corporate Law ( email )

185 Pelham Street, Carlton, Building 106
Victoria 3010
Australia
+61 3 8344 1079 (Phone)

HOME PAGE: http://www.law-cclsr@unimelb.edu.au

Andrew Godwin

Melbourne Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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