Banning Orders: An Empirical Analysis of the Dominant Mode of Corporate Law Enforcement in Australia

Sydney Law Review, Vol. 39, No. 4, pp. 501- 537, 2017

38 Pages Posted: 9 Feb 2018

See all articles by Jasper Hedges

Jasper Hedges

Australian National University, Research School of Social Sciences

George Gilligan

University of Melbourne - Centre for Corporate Law

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: 2017

Abstract

This article is the first detailed empirical study of banning orders made under legislation administered by the Australian Securities and Investments Commission (ASIC). This method of enforcement of corporate law has been little researched, yet it is arguably the dominant mode of corporate law enforcement in Australia. The article examines the prevalence of banning orders relative to other major enforcement outcomes and analyses the number and duration of bans prohibiting individuals from managing corporations, providing financial services, engaging in credit activities, and auditing self-managed superannuation funds. The dataset — encompassing 2777 banning orders across a 29-year period — reveals a significant upward trend in banning orders and a corresponding downward trend in most other major enforcement outcomes. In the 10 years since 2005–06, there were more banning orders than all other major enforcement outcomes combined. Banning orders were also increasingly severe in duration, due to an upward trend in financial services and credit activity bans, about 47% of which were permanent in duration collectively. The increasing prevalence and severity of banning orders, an estimated 87% of which were administrative decisions by ASIC, or appeals from such decisions (rather than first instance decisions by the courts), raise concerns regarding the accountability of banning practices. The judiciary has acknowledged that banning orders, while primarily protective in purpose, also function as a form of retribution akin to criminal punishment. Yet administrative hearings are not subject to the rules of evidence that apply to criminal court proceedings and the reasons for banning orders are not available to the public. The increasingly heavy use of these effectively punitive orders demands a higher standard of public accountability. Improved access to administrative banning decisions would advance ASIC’s stated commitment to transparency, open data and accountability, and give effect to the Australian Government’s Public Data Policy Statement and innovation agenda.

Keywords: Enforcement, Corporate Law, Banning Orders, Australian Securities and Investments Commission

Suggested Citation

Hedges, Jasper and Gilligan, George and Ramsay, Ian, Banning Orders: An Empirical Analysis of the Dominant Mode of Corporate Law Enforcement in Australia (2017). Sydney Law Review, Vol. 39, No. 4, pp. 501- 537, 2017. Available at SSRN: https://ssrn.com/abstract=3113922

Jasper Hedges

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

Canberra
Australia

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

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

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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