In response to the Banking Royal Commission, Parliament passed amendments to the Corporations Act which came into effect on 13 March 2019.
The effect of these changes is to significantly increase the maximum civil and criminal penalties which apply to breaches of the Corporations Act as follows:
|Civil Penalties||Criminal Penalties|
|Person||The greater of:
||15 years imprisonment and/or the greater of:
|Company||The greater of:
||The greater of:
|Note||These fines will rise over time whenever the value of a “penalty unit” changes|
Other changes and responses include:
- civil penalties now apply to a wider range of breaches under the Corporations Act
- a new remedy of relinquishment (also known as “disgorgement of profits”) is available in civil penalty provision proceedings – this remedy is available in addition to pecuniary (criminal) penalties
- in the wake of the Banking Royal Commission, ASIC has signalled its intention to more aggressively pursue claims against companies and individual directors through the courts, with its new mantra of “why not litigate?”
In light of the increased penalties that now apply to breaches of the Corporations Act, companies must take the time to carefully review their business practices and, where necessary, strengthen their corporate governance.