Director Banning Orders Video

Hello and welcome to the Insolvency Experts, I’m Steven Kugel.Today we are going to talk about director banning orders by the Australian Securities and Investments Commission or ASIC.

Many people call me and express their very real concern about liquidating a company because they believe that if they liquidate one company they cannot be a director of another company in the future.

Of course, this is not the case at all.

A person can be a director of as many companies as they desire until such time as they are either bankrupt or subject to a Director Banning Order by the ASIC.

General Rules of ASIC

ASIC will generally not even consider you for a banning order unless

• The liquidation of the company has affected a large number of people and it is in the public interest to disqualify the director for a period of time — and by a large number of people affected, I do not mean the usual 10-20 creditors. The number would need to be far more significant than that.

ASIC will generally not even consider you for a banning order unless

• a director has been involved in the failure of 2 or more companies in the last 7 years where those companies have failed to return at least 50 cents in the dollar to the unsecured creditors.
• The behavior of the director is so extreme that that it warrants ASIC action

Of course, before looking to ban a director, the ASIC will consider the reports of the liquidator who may recommend further action or not depending on the circumstances — so it is possible that even though a director may have been involved in the failure of let’s say 4 companies, the failures may have been caused by factors outside of his control, such as an inability to recover debts due by another company’s failure — so understand there is nothing automatic about disqualification orders at all.

Now just saying that, ASIC will look very closely at banning directors who repeatedly liquidate or deregister companies depending on the circumstances.

Of course, if ASIC does look at a banning order, it is a difficult but fair process that allows directors a right of appeal all the way through to the

Administrative Appeals Tribunal.
So you see, there is no hard and fast rule regarding director banning orders.