Submission to the Commonwealth Treasury: Review of Sanctions in Corporate Law: Consultation Paper

This submission addresses the release of the Commonwealth Treasury’s consultation paper on the Review of Sanctions in Corporate (March 2007). The University of Western Sydney (UWS) has a corporate law academic group within the School of Law, who wish to provide an informed debate on these critical issues. Some of the suggestions that have been provided in this submission are of a policy nature and observe under which circumstances the Australian Securities and Investments Commission (ASIC) uses the different penalties available to it within the corporations’ law domain. The consultation paper, Review of Sanctions in Corporate Law, reviews the criminal, civil and administrative sanctions present under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth). It additionally looks at the defences that may be available for directors in case of breaches of directors’ duties and it considers certain changes to the provisions of market manipulation in the Corporations Act. The observation of the UWS Corporate Law Academics can be summarised in the following manner: • Introduction of administrative penalties in the instances of low level offences. • There is a need to update Schedule 3 in the Corporations Act. • The provisions in relation to civil penalties need to be clarified in certain instances • Administrative sanctions are important and need to stay as a part of company law. • There is no need to create a new general defence. The UWS Corporate Law Academics proposes to reform the business judgement rule defence and extend it to other breaches of directors’ duties. • The market manipulation provisions require some clarification as to the definition of market manipulation but there is no need to include new elements to the definition (for instance, recklessness)