‘Radical’ changes see strengthened corporate penalties
The recent passing of Treasury law amendments for the strengthening of corporate and financial sector penalties has wider-reaching, ‘radical’ implications than it would appear, according to a dispute resolution partner.
Last week’s passage through both houses of the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 has exposed a myriad of impacts “greater even than the headline figures suggest”, Ashurst’s dispute resolution partner Andrew Carter said.
“On any view, the new maximum penalties, at $10.5 million for the smallest AFSL holders and $525 million for the largest, are very large,” Mr Carter said.
He noted that the courts won’t generally impose the maximum penalty, “but the maximum is a key factor in setting penalty.”
In considering the impact of the amendments, Mr Carter explained that “these are figures for each contravention – in practice, when something goes wrong there can be many contraventions, so the total maximum penalty in any particular case can be many multiples of the maximum penalty per contravention”.
In listing other factors that make the impact greater than it first appears, Mr Carter highlighted that “under the new legislation, continuing contraventions are treated as being a new contravention every day – so the maximum if a breach continues ten days might be $5.25 billion”.
“A court would moderate that a great deal, but the result could still be a penalty well in excess of $525 million in some cases,” he continued.
What makes these changes even more significant “is that civil penalties can now be imposed for a much wider range of matters – in particular, not meeting the general obligation on AFSL holders to act efficiently, honestly and fairly, and failure to report breaches to ASIC in time”, according to the lawyer.
“So overall, the implications of non-compliance are radically changed by this legislation, posing new challenges for licensees and their boards.”
Mr Carter went on to consider that for listed licensees, “this will also raise new continuous disclosure challenges, given the size of the potential penalties”.
Interested in the issues shaping the in-house legal landscape? Don’t miss your chance to hear from local and global in-house legal powerhouses at the 2019 Corporate Counsel Summit!