The director of a company that was wound up by the Australian Taxation Office has been handed a suspended jail sentence after he failed to hand over documents to his business’s liquidator.
Joseph Cogno, the director of Middlebrook Estate Pty Ltd, was sentenced last week to three months imprisonment after pleading guilty to charges brought forward by the Australian Securities and Investments Commission.
The corporate watchdog alleged Cogno failed to provide the necessary documents to the liquidator of his company.
Middlebrook Estate was wound-up by the Federal Court last month following an application by the Deputy Commissioner of Taxation.
However Cogno’s prison sentence was wholly suspended because he has agreed to enter into a good behaviour bond.
The good behaviour bond requires him to comply with his obligations to the liquidator of his company.
ASIC commissioner Greg Tanzer said in a statement company officers and other related individuals have a statutory obligation to provide assistance to a liquidator.
“This is an important part of maximising the opportunity for returns to creditors and identifying any misconduct which may have contributed to the company’s collapse,” Tanzer said.
“ASIC will act against company directors and other officeholders who fail to meet their obligations once a company has been placed into liquidation.”
ASIC prosecuted 355 individuals from 2014-15 in relation to this type of misconduct.
As a result, the corporate watchdog handed out fines totalling around $900,000.
Marika Hubble-Marriott, principal at Russell Kennedy lawyers, told SmartCompany it is an offence to not comply with a liquidator’s requests under the Corporations Act.
Failing to provide a liquidator with books and records can attract a fine of up to $9000, a penalty of one year in prison, or both.
Failing to provide a liquidator with a RATA (Report as to Affairs), meanwhile, can see a director slugged with a $4500 fine, six months in jail, or both.
“What it’s geared towards is getting the directors to cooperate to provide sufficient information and documentation to assist liquidators to realise the assets of the company and hopefully show a return to creditors,” Hubble-Marriott says.
However Hubble-Marriott points out is is “unusual” for a jail sentence to be handed down in these sorts of cases, suspended or otherwise.
SmartCompany was unable to contact Joseph Cogno for comment.