A company director has been handed the maximum five-year ban over his involvement in five failed companies that collectively owe an estimated $3.5 million to creditors.
The corporate regulator ASIC metered out the ban to Victoria man Charles Montgomery Clarke over a range of alleged failures at five companies he oversaw that have since collapsed.
Those entities were:
- CMTC Pty Ltd (ACN 607 395 004)
- CCSLS Services (VIC) Pty Ltd (ACN 600 600 388)
- CC Specialized Landscape Services Pty. Ltd. (ACN 103 968 467)
- CCSLS Holdings Pty Ltd (ACN 152 557 223)
- A.C.N. 144 899 007 Pty Ltd (ACN 144 899 007)
ASIC relied on reports from liquidators of the failed companies to allege that Mr Clarke made a number of failures in his duties as a company director, including not paying tax, not maintaining adequate financial records and allowing one of the companies to continue trading while potentially insolvent.
Mr Clarke was also accused of engaging in phoenix activity by transferring assets from a failed business into a new company.
Creditors of the five companies are collectively owed in the vicinity of $3.5 million, ASIC said.
Under the terms of the ban, Mr Clarke is ineligible to operate a business for a period of five years until after 6 September 2023.
Cracking down on phoenix activity is a major focus for the federal government and regulators, including ASIC.
At the National Small Business Summit in August, both ASIC and the ATO revealed this as one of their key regulatory priorities in the current financial year.
“It is a serious problem in Australia,” ASIC commissioner John Price said at the time.
“Illegal phoenix activity is estimated to have cost our economy between $2.85 and $5.13 billion a year, and the cost to business is up to about $3.1 billion a year.”
It is also the government’s chief justification for rolling out a new Director Identification Number (DIN) system, which was first flagged in 2017 before draft legislation on the proposal was unveiled early this month.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.