Corporate Regulation
CORPORATIONS LAW
To deter future misconduct, the Penalties Act has increased civil and criminal penalties for breaches of the Australian Securities and Investments Commission ( ASIC ) administered legislation including the Corporations Act 2001 (Cth) ( Corporations Act ), Australian Securities and Investments Commission Act 2001 (Cth), National Consumer Protection Act 2009 (Cth) and the Insurance Contracts Act 1984 (Cth) ( Insurance Contracts Act ). The Penalties Act increases financial penalties and terms of imprisonment. Those involved in corporate misconduct face a greater risk of increased financial exposure for such wrongdoing. Civil penalties increased up to a cap of AUD 525 million for corporations. Criminal penalties are further set out in the Corporate Crime Regulatory Update (see page 20). Breaches of general Australian Financial Service Licence ( AFSL ) obligations by a company under section 912A of the Corporations Act will now attract a financial penalty. Under the Penalties Act the penalty will be the greater of: –– AUD 10.5 million; –– three times the value of the benefit derived from the contravention; and –– 10% of the company’s annual turnover, capped at AUD 525 million. The Courts have also been provided with greater discretion toprovide compensation to victims and a relinquishment regime has been introduced to ensure any financial benefit gained as a result of the misconduct is disgorged.
WHAT ARE THE EMERGING ISSUES?
–– Tougher penalty framework –– Revised ASX Governance Principles –– Climate change disclosure
NEW PENALTY FRAMEWORK FOR CORPORATIONS LAW
From 13 March 2019, companies that engage in corporate misconduct are now exposed to significantly increased financial penalties. The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth) ( Penalties Act ) received Royal Assent on 12 March 2019. The Penalties Act is designed to deal with the long-held concern that penalties for breaches of corporations law are insufficient to deter misconduct. This issue was squarely raised in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ( the Financial Services Royal Commission ).
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