Directors in Australia have a responsibility to ensure their company maintains a corporate culture that complies with the law. The Australian corporate regulatory framework is constantly being refined and strengthened and has been one of the secrets to the resilience of Australian capital markets and public corporations when global markets and international companies have faltered and fallen.
The Corporations Act and the Australian Stock Exchange (ASX) Listing Rules encourage and regulate the dissemination of accurate and timely information about public corporations in Australia. The current Code for Australian Corporations is produced by the ASX Corporate Governance Council and is called the Corporate Governance Principles and Recommendations 3rd
It is mandatory for public companies listed on the Australian Stock Exchange to disclose the company’s corporate governance compliance: http://www.asx.com.au/documents/rules/gn09_disclosure_corporate_governance_practices.pdf
To bolster the effectiveness of the laws criminal sanctions apply to some misconduct by directors, controllers and senior management of corporations.
and s 1311 Corporations Act 2001: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1311.html.
Section 11.2 in Chapter 2 the Criminal Code extends criminal liability to any person who was directly or indirectly knowingly concerned with an offence.
“Under the Criminal Code of the Commonwealth, a company can be convicted of criminal offences which have an ‘intent’ element. This means that a conviction can result if it is established that a
company had a culture that directed or encouraged, tolerated or led to non- compliance, or that the body failed to maintain a culture that required compliance with relevant legislation. The need to be able to demonstrate a culture fostering compliance with Australian law is of great importance to a board of directors as they seek to set the tone in their company.” The Australian Securities and Investments Commission website (ASIC is the Corporate Regulator in Australia).
Section 184(2)(a) of the Corporations Act 2001 creates the white collar crime of a director dishonestly using his position with the intention of directly or indirectly gaining an advantage for himself and others. The maximum penalty for each offence is five years imprisonment and/or a fine of $220,000. Introduced in 1993, Section 1041E of the Corporations Act 2001 creates an offense of making false statements to investors. The maximum penalty is imprisonment for 10 years or a $495,000 fine or both.
Also lawyers and auditors responsible for false and misleading prospectuses by public companies face stern penalties in addition to common law liability: s 728 of the Corporations Act
Australia also has the world’s fourth largest managed funds industry in the world. This sector (that includes all financial institutions such as deposit taking banks, insurance and superannuation) has its own dedicated regulator the Australian Prudential Regulation Authority (APRA). See Australian Prudential Standard APS 520 for leaders of banks and regulated institutions in
Financial Transactions Reports Act 1988 also is part of Australia’s strong corporate governance and national security framework. Together with the Anti-Money Laundering and Counter Terrorism Financing Act 2006, the legislation covers anti-money laundering and counter terrorism financing. The Australian corporate regulatory framework is constantly being refined and strengthened (including the insistence of adequacy of capital in its financial institutions/pension funds) and has been one of the secrets to the resilience of Australian capital markets and corporations when global markets and international companies have faltered and fallen.
See too our article Minority Shareholders have the right not to be oppressed