insolvency/in financial difficulty 101 asic, page-2

Legin...

I like the sound of compensation proceedings...
this sounds like a breath of fresh air after..what all the holders have been through....more importantly holders will know the TRUTH...

Civil penalties

Contravening the insolvent trading provisions of the Corporations Act can result in civil penalties
against directors, including pecuniary penalties of up to $200,000.

Compensation proceedings

Compensation proceedings for amounts lost by creditors can be initiated by ASIC, a liquidator or a
creditor against a director personally. A compensation order can be made in addition to civil penalties.
Compensation payments are potentially unlimited and could lead to the personal bankruptcy of
directors. The personal bankruptcy of a director disqualifies that director from continuing as a director
or managing a company.

Criminal charges

If dishonesty is found to be a factor in insolvent trading, a director may also be subject to criminal
charges (which can lead to a fine of up to $220,000 or imprisonment for up to 5 years, or both). Being
found guilty of the criminal offence of insolvent trading will also lead to a director’s disqualification.
ASIC has successfully prosecuted directors for allowing companies to incur debts when the company
is insolvent, and has sought orders making directors personally liable for company debts. ASIC also
runs a program to visit directors, where appropriate, to make them aware of their responsibilities to
prevent insolvent trading.
The good news is that taking steps to ensure your company remains financially sound will minimise
the risk of an insolvent trading action. It may also improve your company’s performance.