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Thursday 16 March 2017

17-067MR Former director disqualified from managing companies

Michael Ian Davey, of Slacks Creek, Queensland, has been banned by ASIC from managing corporations for two and a half years.

Mr Davey's banning follows the appointment of liquidators to two companies he managed, Refractory Construction Pty Ltd (formerly known as Total Refractory Management Pty Ltd) and A4dable Geeks Pty Ltd.

As a result of information contained in reports provided by the liquidators of the failed companies, ASIC was concerned Mr Davey had:

  • failed to prevent the companies from trading while insolvent;
  • failed to ensure the companies paid their taxes;
  • failed to discharge his duties as a director; and
  • had engaged in illegal 'phoenix activity' – an activity which involves transferring the assets of an indebted company into a new company, while leaving the initial company with insufficient assets to pay creditors.

On 8 February 2017, Mr Davey appealed to the Administrative Appeals Tribunal (AAT) for a stay against the disqualification. On 7 March 2017, Mr Davey further requested a confidentiality order against the publication of his disqualification and his AAT appeal. While the AAT dismissed Mr Davey's appeal regarding the stay and confidentiality orders on 9 March 2017, his appeal against ASIC's disqualification is still before the AAT.

ASIC Commissioner, Peter Kell said, "Directors need to be vigilant when it comes to managing companies and need to discharge their duties both lawfully and ethically. Where they fail to do so, ASIC will take steps to protect consumers and creditors from such directors by disqualifying them from managing companies."

Background

Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for up to five years if, within a seven-year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC about the company’s inability to pay its debts.

ASIC also maintains a public register of banned and disqualified persons that provides information about people who have been:

  • disqualified from involvement in the management of a corporation;
  • disqualified from auditing self-managed superannuation funds (SMSFs); or
  • banned from practising in the financial services of credit industry.

Mr Davey's banning took effect from 21 January 2017.

The reports prepared by the liquidators of Refractory Construction Pty Ltd and A4dable Geeks Pty Ltd were assisted by funding from the Assetless Administration Fund.

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Last updated: 16/03/2017 02:48