Directors of failing companies are sometimes making their predicament even worse by breaking laws that require them to provide business information to liquidators.
The vast majority of a whopping 140 successful prosecutions of company directors conducted by the Australian Securities & Investments Commission over the past three months involved a failure to:
- Provide the businesses books to liquidators.
- Comply with reasonable requests by liquidators to assist in winding up the company.
- Provide up-to-date contact information to the liquidator.
- Provide reports on the business to the liquidator containing the legally required information in the time required.
The consequence? Fines totalling more than $337,000, with individual penalties ranging from being required to enter good behaviour bonds to fines more than $9000.
ASIC’s executive director of consumer protection, Greg Tanzer, says action was generally required where company directors refused to assist liquidators in the administration of their failed companies or did not give correct contact information in an attempt to hide from creditors.
“ASIC will take action against company officers who hamper the role of a liquidator in assessing how much the failed company might be able to return to creditors. Where company officers are uncooperative and refuse to provide information on the company’s finances and history, ASIC will step in and take the necessary action,” Tanzer says.