Page 86 - Week 01 - Wednesday, 8 April 1992
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
In the context of section 232 it is also relevant to note that the provisions apply only to a corporation within the meaning of the Corporations Law 1990, which effectively means a company as we would understand it. I think there is an argument that says that prohibitions of officers misappropriating company property should be part of the general law. It does not apply, for example, in its present form to incorporated associations, trade unions or cooperative societies.
The result of these arguments is that certain actions by officers of companies and other incorporated bodies, which in at least most of the States attract criminal sanctions, will probably go unpunished in the Australian Capital Territory. An illustration of the type of problem we might have is given by the last prosecution launched by the old ACT Corporate Affairs Commission under the former section 173. It should be noted that, although the information in that matter was laid in 1988 and the matter was heard in 1989, the facts occurred in 1985, that is, before the repeal of section 173.
This case related to a person who, while not formally appointed a director of a company, carried out all the functions of the managing director of a company, which I will call company A, and was clearly in total control of that company. The reason for the person's non-appointment as a director was that he was an undischarged bankrupt. As a result, he was charged with an offence under subsection 227(1) of the Companies Act 1981, and was found guilty.
Company A experienced financial difficulties and was clearly insolvent, having an excess of liabilities over assets. During the period of decline of company A, the de facto director started another similar business with another company, company B. He also made false entries in the accounting records of company A to disguise his actions. He would, for example, order goods and services on credit in the name of company A, but all sales were made in the name of company B and revenues were paid into a bank account in the latter's name. This stratagem was clearly designed to defeat creditors and enable him to enjoy the profits of continuing in business.
He was convicted in mid-1989 of a number of offences against section 173, now repealed, and he was sentenced to six months' imprisonment, which I think was subsequently suspended. Because of his personal circumstances, there was no possibility of restitution of the persons defrauded. Back-up charges under section 229 of the Companies Act were laid as alternatives to the section 173 charges. It is important to note, however, that the magistrate in that matter commented that, had the section 173 prosecution failed, he felt it was unlikely that the Companies Act charges would have succeeded in securing a conviction. Equally clearly, had the person been charged with theft, Roffel's case almost certainly would have prevented a conviction.
This particular provision is quite clear. It is quite straightforward. It is a simple restatement of what I think all of us would consider to be a quite obvious duty on the part of all officers of corporations, and one which I trust and hope this Assembly will support. It is a matter which I believe needs to be well ventilated in the community, particularly the business and legal communities. I am sure that, I having tabled this Bill today, that will occur, and I look forward to debate on this Bill in due course. I commend the Bill. It is a very sensible Bill, too.
Debate (on motion by Mr Connolly) adjourned.
Next page . . . . Previous page . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .