Directors Publishing False Statements

Directors are required to carry out duties and obligations with due diligence. Directors must, at a minimum, become familiar with the fundamentals of the business, and monitor the company’s activities and finances. There is a range of offences which can be committed by a director. In Victoria, one of these offences is when a director publishes a false statement. Examples of the offence include when a director emails members to say performance targets are being met when the company is in fact  performing badly, or when a director fabricates output to sway an investor.

The legislation

Section 85(1) of the Crimes Act 1958 states:

“Where an officer of a body corporate or unincorporated association (or person purporting to act as such), with intent to deceive members or creditors of the body corporate or association about its affairs, publishes or concurs in publishing a written statement or account which to his knowledge is or may be misleading, false or deceptive…”

The maximum penalty is 10 years imprisonment.

What must be proven

For a court to find a person guilty of this offence it must be satisfied that there was director intended to deceive. The element of intent includes knowledge the information is misleading, false or deceptive.

A director can also be found guilty of the offence if they agree to publish a false statement or account about the company.

Defences

The possible defences depend on the specific circumstances of the alleged offending, but they include:

• no false statements were made;
• the director had no intention to deceive;
• the director did not know the statements were false.
• duress.

If you require legal advice or representation in any legal matter, please contact Armstrong Legal.