The
The decision is also a reminder that retiring directors wishing to avoid personal responsibility for a company's conduct need to notify ASIC promptly and effectively.
In
-
where it is just and equitable; and
- on proof that the company acted honestly.
Under section 205(A)(1) of the Act, a director may lodge with ASIC a notice of their retirement or resignation. If that director does not do so, the company must do so within 28 days of the retirement or resignation (as per s 205(B)(5) and s 205B(6)(b) of the Act).
As per s 205B(7) of the Act, it is a strict liability offence for a company not to do so.
A director of
An announcement of
ERA discovered the oversight on
Pursuant to s 203AA(1)(b), that director's resignation took effect on the day written notice of her resignation was lodged with ASIC being 11 November 2021. This left
It was open to ERA to apply for an order from the Court under s 203AA(2) to fix an alternate, earlier date as the date of the director's resignation.
Such an application is subject to the provision of a full and proper explanation to the Court in respect of the failure to comply with the 28-day period, to show that no substantial injustice would arise from the granting of such an order, and also to show that the person involved, (i.e. ERA) had acted honestly.
In
She admitted to the Court that it was an oversight on her part. When that oversight was discovered on or around
It therefore became necessary for the company to make an application to the Federal Court under s 203AA(2)(b) of the Act to seek an order to fix the resignation date as
The Court was ultimately satisfied that the director ceased being a director on
The Court found no evidence that the company or the Company Secretary had acted dishonestly, and found that the non-compliance was entirely inadvertent.
The Court was also satisfied that no substantial injustice had been, or was likely to be caused to any person, and made an order under s 1322(4)(c) relieving the company from any civil liability in respect of its contravention of s 205(B)(5).
The importance of complying with obligations set out in the Act is paramount, when considering the prospect of personal liability for departing directors, and compliance obligations for companies.
The significant cost of an application to Court, and the associated risk and stress, both to the company officers and
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Level
2000
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