Two directors of Sheffield Insurance Pty Ltd (Sheffield) have been convicted of two offences and fined $15,000 over their role in Sheffield failing to lodge financial statements and auditor's reports with ASIC for five years.
Phillip Bird of Alexander Heights, WA and Daniel Holmes of Beechboro, WA, were convicted and fined after each pleaded guilty to two charges of aiding, abetting, counselling or procuring Sheffield to commit an offence, one offence being the failure to lodge profit and loss statements and balance sheets (together, financial statements) and the second offence being the failure to lodge auditors' reports.
ASIC had alleged that, as Sheffield's directors, Mr Bird and Mr Holmes failed to take steps to ensure that Sheffield lodged financial statements and auditors' reports with ASIC for each financial year between 2019 and 2023 inclusive and were aware of the obligation to do so.
As the holder of an Australian financial services (AFS) licence, Sheffield is required to lodge financial statements with ASIC within 3 months of the end of each financial year.
ASIC Deputy Chair Sarah Court said, 'It is important that AFS licensees lodge timely reports with ASIC so that ASIC can monitor their financial health and make sure they meet their financial obligations under law. Financial reporting misconduct is now an enforcement priority for ASIC and we will not hesitate to take action for reporting failures. Today's decision show that directors can also face individual criminal consequences over their business's reporting failures.'
The matter was prosecuted by the Office of the Director of Public Prosecutions (Cth) (CDPP). after a referral from ASIC.
Mr Bird and Mr Holmes were also each ordered to pay court costs of $268.80.
Background
Australian financial services (AFS) licensees must have adequate financial resources to provide the financial services covered by their AFS licence and to carry out supervisory arrangements. FS Licensees are required to submit financial statements to ASIC to maintain investor confidence and ensure the accountability of management through the provision of timely and reliable financial information.
The maximum available penalty for the offences is a term of 5 years imprisonment and/or fine of up to $126,000. However, when the charges are dealt with summarily (with the consent of prosecution and defence), the maximum penalty for each offence is 12 months' imprisonment and/or a fine not exceeding 60 penalty units (at the relevant time, $12,600).
Failing to lodge financial statements and auditor's reports to ASIC are criminal offences under 989B(2) and s989B(3) of the Corporations Act 2001.
