The Policy and Practice of Enforcement of Directors' Duties by Statutory Agencies in Australia: An Empirical Analysis

62 Pages Posted: 18 Mar 2017 Last revised: 19 Oct 2017

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 16, 2017

Abstract

The enactment of the civil penalty regime in 1993 introduced a new approach to the enforcement of directors’ duties by statutory agencies in Australia. The policy considerations that led to the regime, and which continue to inform current policies on corporate law enforcement, require that: civil enforcement be given primacy over criminal enforcement, with the latter reserved for more serious misconduct; a range of sanctions be calibrated to the severity of the misconduct in accordance with a pyramidal model of enforcement; and sanctions be set at a sufficient level to deter misconduct. This article analyses the extent to which these policies have been applied in practice by reference to a 10-year dataset of 27 civil, 72 criminal and 199 administrative directors’ duties matters (involving 360 defendants) brought by the Australian Securities and Investments Commission and the Commonwealth Director of Public Prosecutions. The dataset, which includes data obtained from ASIC and the CDPP that has not previously been published, indicates that such policies have, to a large extent, not been applied in practice. These are significant findings given the central role that enforcement of directors’ duties performs in the regulation of corporate activity in Australia and the impact of such activity on society and the economy.

Keywords: Directors' Duties, Enforcement, Civil Penalties, Australian Securities and Investments Commission

Suggested Citation

Hedges, Jasper and Bird, Helen Louise and Gilligan, George and Godwin, Andrew and Ramsay, Ian, The Policy and Practice of Enforcement of Directors' Duties by Statutory Agencies in Australia: An Empirical Analysis (March 16, 2017). Melbourne University Law Review, Vol. 40, No. 3, pp. 905-966, 2017; U of Melbourne Legal Studies Research Paper No. 755. Available at SSRN: https://ssrn.com/abstract=2934119

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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