Enforcement Action Against Company Directors and Officers by the Australian Securities and Investments Commission (Research Report)

Abstract

The statutory duties and obligations owed by directors and officers of Australian companies under the Australian corporations legislation are enforced by the Australian Securities and Investments Commission (ASIC). There has been recent debate regarding whether ASIC is commencing enough enforcement actions against company directors and officers. The authors examine enforcement action brought by ASIC against directors and officers in which ASIC was successful for the three years from 2021 to 2023. The findings include: (1) of the 203 successful outcomes, 42 were criminal outcomes, 22 were civil outcomes, 136 were administrative outcomes, two were enforceable undertakings and one was a public warning notice; (2) nearly all ASIC enforcement outcomes (196 of 203) were against directors and only seven were against officers; (3) while 95 percent of the administrative outcomes and 83 percent of the criminal outcomes were against directors or officers of private companies, only 50 percent of the civil enforcement outcomes were against directors or officers of private companies; (4) the most common statutory offence, by a significant margin, was s 184(2) of the Corporations Act, which is a prohibition on misuse of position; and (5) banning or disqualification orders were the most common enforcement outcome (134 of 203 total outcomes). The authors discuss possible explanations for these findings.  An edited and shorter version of this research report was published as Ian Ramsay and Miranda Webster, 'Enforcement Action Against Company Directors and Officers by the Australian Securities and Investments Commission' (2024) 45 Company Lawyer 399-406.

Keywords: directors' and officers' duties, enforcement, Australian Securities and Investments Commission