5. The Role of a Company Director

5.2. Penalties for Non-compliance for Directors of a Company

The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 commenced on 13 March 2019, strengthening existing penalties and introducing new penalties for those who breach the corporate laws of Australia.

Under the new penalty provisions:

  • maximum prison penalties for the most serious offences have increased to 15 years – including breaches of director’s duties, false or misleading disclosure and dishonest conduct
  • maximum civil penalties for individuals and companies have significantly increased, and
  • civil penalties now apply to a greater range of misconduct – including a licensee’s failure to act efficiently, honestly and fairly, failure to notify about reportable situations and defective disclosure.

The new penalty provisions enable ASIC to pursue harsher civil penalties and criminal sanctions under the following ASIC-administered legislation:

  • Corporations Act 2001
  • Australian Securities and Investments Commission Act 2001
  • National Consumer Credit Protection Act 2009 and National Credit Code
  • Insurance Contracts Act 1984.

The strengthened penalties apply to contraventions occurring from 13 March 2019 onwards.

Increased civil penalties for individuals and companies

Under the new penalty provisions, the maximum civil penalty for individuals is the greater of 5,000 penalty units (currently $1.565 million) or three times the benefit obtained and detriment avoided.

The maximum civil penalty for companies is the greater of:

  • 50,000 penalty units (currently $15.65 million)
  • three times the benefit obtained and detriment avoided, or
  • 10% of annual turnover, capped at 2.5 million penalty units (currently $782.5 million).

The value of a penalty unit is prescribed by the Crimes Act 1914 and is currently $313 for offences committed on or after 1 July 2023.[1]