Manage corporation whilst disqualified

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Written by Richard Mayo, Senior Criminal Lawyer.
Richard has a wealth of experience in corporate crime and has spent time with both state and Commonwealth DPPs.
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Common reasons for disqualification

You will be disqualified from managing a corporation if:

1. You have been declared bankrupt
2. You have been convicted of a major offence under the Corporations Law or an offence of dishonesty under the state legislation.
3. You have been disqualified by ASIC directly or by court order for conduct related to previous poor management of companies.

What the law says:

It is an offence under the Corporations Act to manage a corporation whilst disqualified from doing so.

What the prosecution must prove - the elements of the offence:

1. That you are disqualified from managing a corporation under a specific part of the Corporations Act (Part 2D.6)

2. (a) That you made decisions which affected the whole or a substantial part of the business; or(b) That you made decisions which had the capacity to significantly affect a corporations financial standing; or(c) That you communicated instructions to the directors of the corporation which are not given by way of advice and fall within your professional capacity within the corporation, and the directors are accustomed to act in accordance with your instructions

Possible defences

It is a defence to this charge if you have obtained permission from ASIC to act as a director.

You will be able to successfully defend the charge if you can show that you were not acting in a management capacity but rather, were simply providing advice and/or guidance whilst the actual directors maintained the ultimate decision making capability.

Maximum penalty

The maximum penalty for this offence is 12 months imprisonment and/or a $5,500 fine.

Definition:

Summary matter

Which court is likely to hear the matter?

This matter is summary and will be dealt with in the Local Court.

For more information: