Director disqualifications difficult to enforce

Director disqualifications difficult to enforce

Businesses are being urged to report disqualified operators who continue running a company, despite significant hurdles in proving someone is flouting their ban.

Following a recent My Business story on a former company director banned from managing a business, one reader commented that the individual in question was defying the ban and continuing to run the business.

The anonymous reader expressed frustration at the situation and the apparent lack of reprimand for the alleged breach.

My Business contacted ASIC regarding the situation; however, no proof was found that the ban was being ignored.

Due to privacy and defamation considerations, the identity of the individual in question has been withheld and the reader’s comment was not published.

A spokesperson for ASIC said individuals can be mistaken for defying a managerial ban, given that it is not illegal for them to remain working within the business.

According to the ASIC website, being banned as a director makes an individual “disqualified from involvement in the management of a corporation”.

This can include making financial and strategic decisions for the business, but does not preclude them from continuing to work for the business as an employee.

Nevertheless, the spokesperson urged all operators to report anyone they suspect of breaching a ban directly to ASIC, and provide any evidence they have to support their claim – such as that the individual continues to make financial decisions for the business.

ASIC maintains a register of banned and disqualified individuals, with basic information available for free.

Director disqualifications difficult to enforce
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