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Convictions for Summary Insolvency Offences Committed by Company Directors

NCJ Number
Peter Keenan
Date Published
February 2013
8 pages
This study analyzes the raw information in the conviction reports of the Australian Securities and Investments Commission (ASIC) for the 5 calendar years 2006 to 2010, with a focus on convictions and fines for insolvency offenses committed by company directors.
In fiscal year 2010-11, business liquidations due to insolvency composed approximately 67 percent of all 14,566 insolvency appointments. Approximately 34 percent of the 9,780 liquidator appointments in 2010-11 were "compulsory liquidations" ordered by a court. Such liquidations are often called court-appointed liquidations. Most post-appointment insolvency offenses consist of failure-to-assist offenses, in which directors fail to comply with their obligations to assist the external administrator by providing information. Another offense related to liquidation due to insolvency pertains to continued failure to do a specified act. The study found that cases related to insolvency between 2006 and 2010 had fewer convictions on average and smaller fines imposed. Further research is required to reach definitive conclusions on why this has occurred, as well as why New South Wales and Queensland have gone against this trend. Of particular interest in such research would be data on activities within the ASIC's Liquidator Assistance Program. Questions to be answered are whether the program focuses more on some Australian States than others; whether there have been fewer complaints by liquidators against company directors; whether prosecution success rates have declined and, if so, whether this has varied from State to State; and whether directors are becoming more compliant. Also, further analysis of court records and interviews with offenders would be required to reach a definitive view on the factors influencing the lowering of fines for insolvency offenses. 26 references and 5 tables