Directors (ASIC)

The Australian Securities & Investment Commission (ASIC) is the investigative agency responsible for responding to misconduct of company directors. The standards that directors must abide by can be set by the organisation itself, through codes of conduct, by-laws, regulation, or by another source, such as accreditation standards. Generally, ASIC refers breaches of law to the Commonwealth Department of Public Prosecutions (CDPP) for actioning under legislation such as Corporations Act 2001 (Cth), Australian Securities and Investments Commission Act 2001 (Cth), and National Consumer Credit Protections Act 2009 (Cth). 

Immediate Action

Complex commercial crimes, including misconduct by directors, can be difficult to investigate and prosecute and thus ASIC may take substantial time to come to a conclusion regarding a complaint about a company. For this reason, whistle-blowers have the option, but are not required, to report the misconduct or breach of law to the company before submitting a complaint to ASIC. If this is a viable course of action, misconduct should be reported to as many senior employees within the organisation as possible. Certain companies are required to have a whistle-blower policy, including public and large proprietary companies. These policies will protect people complaining about misconduct directly to companies, however if a company does not have such a policy in place it may be best to make a complaint to ASIC in the first instance.

Formal Investigation

The formal investigation process can begin when a person reports misconduct through ASIC’s online form. The form generally takes around 10-15 minutes to complete and must be completed in one sitting so it is helpful to have all material facts written out before commencing the reporting process. An accurate and detailed summary of the facts will aid ASIC in responding quickly and an analyst will contact the complainant to ascertain what further details or documents they may require. ASIC aims to respond to complainants within 28 days to advise of their assessment. They are required to keep a complainant’s personal information private.

In relation to directors, ASIC investigates matters including:

  • Employment (wages and conditions);
  • Scams;
  • Running of companies (illegal phoenix activity etc.); and
  • Shares and market misconduct (insider trading etc.).

ASIC does not act for individuals and generally only acts where there is a wider public interest to do so. They weigh every complaint against four basic questions:

  1. What is the extent of harm or loss?
  2. What are the benefits of pursuing the misconduct?
  3. How do other issues, such as the type and seriousness of the misconduct and the evidence available, affect the matter?
  4. Is there an alternative course of action?

After an initial assessment ASIC will decide whether they will investigate. If they do, it will generally be communicated to the complainant and opens up a wide array of options to them. They may refer the report to a specialist investigation or surveillance team within ASIC or take administrative, licensing, criminal or civil action to remedy any breach of the laws they administer.


If it is found that a director did participate in the suspected misconduct, ASIC must assess the appropriate remedy based on five questions:

  • What is the nature and seriousness of the misconduct?
  • What was the post-misconduct behaviour of the offender?
  • What is the strength of the case?
  • What impact will the remedy have on the person, regulated population, and public?
  • Are there any mitigating factors?

Based on these factors a remedy is selected and may be punitive (e.g. prison), protective (e.g. prevention from acting as a director in future), preservative (e.g. an injunction), corrective (e.g. court order to correct statements), compensatory, or it may involve a negotiated resolution.

Upon application by ASIC, there are a wide array of civil penalties and fines available to be imposed upon directors via the courts for breaches of director duties. A civil pecuniary penalty order may be enforced if a person has contravened a relevant penalty provision and can attract a maximum penalty of $200,000. If any money has been earned by a director through a contravention of relevant provisions of the Corporations Act 2001 (Cth), then a court may enforce a compensation order to pay back the illegitimate money. Once civil proceedings have been finalised, criminal proceedings may still be commenced against a director which, depending upon severity of breach, may result in jail time.

How can we help?

Due to the extensive duties imposed upon directors, misconduct allegations can have serious implications for your professional and personal life. Robertson O’Gorman is committed to assisting clients throughout every step of an ASIC investigation up until, and including, the possibility of representing your interests in court. Throughout the process Robertson O’Gorman is well equipped to make oral and written submissions on your behalf.