Director fined for inadequate books
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Tuesday, 9 January, 2001 - 21:00
BOOKKEEPING, the bug bear of many small businesses, is vital, as a former WA company director has found.
The Supreme Court of WA recently upheld a Perth Court of Petty Sessions decision to convict and fine Kazhak director Ross Love $1,500 for failing to ensure his company kept adequate books.
Kazhak, which operated a caravan park in Fremantle, was placed into receivership in 1993 and subsequently deregistered. The receiver questioned the state of the company’s books.
Compliance with Corporations Law was made easier for small businesses in 1995 when the Corporate Law Reform Act came in. Before that small businesses had to submit accounts each year to the Australian Securities and Investments Commission, just as companies such as BHP had to.
ASIC WA director enforcement Stephen Howell said despite the easing of compliance, small businesses still had to keep adequate books and records.
“What many people may not realise is that in addition to criminal liability, a director who contravenes this requirement of law may be liable to a civil penalty of up to $200,000 and to being disqualified from being a company director,” Mr Howell said.
“Moreover, in many cases a company will be presumed to be insolvent for any period where it has failed to keep adequate books and records, exposing directors to the risk of being held personally liable for any debts incurred by the company during this period.”
Combined Small Business Associations of WA president Oliver Moon said the reporting requirements were making small businesses more professional.
“This should, in time, mean less small business failures,” he said.
The Supreme Court of WA recently upheld a Perth Court of Petty Sessions decision to convict and fine Kazhak director Ross Love $1,500 for failing to ensure his company kept adequate books.
Kazhak, which operated a caravan park in Fremantle, was placed into receivership in 1993 and subsequently deregistered. The receiver questioned the state of the company’s books.
Compliance with Corporations Law was made easier for small businesses in 1995 when the Corporate Law Reform Act came in. Before that small businesses had to submit accounts each year to the Australian Securities and Investments Commission, just as companies such as BHP had to.
ASIC WA director enforcement Stephen Howell said despite the easing of compliance, small businesses still had to keep adequate books and records.
“What many people may not realise is that in addition to criminal liability, a director who contravenes this requirement of law may be liable to a civil penalty of up to $200,000 and to being disqualified from being a company director,” Mr Howell said.
“Moreover, in many cases a company will be presumed to be insolvent for any period where it has failed to keep adequate books and records, exposing directors to the risk of being held personally liable for any debts incurred by the company during this period.”
Combined Small Business Associations of WA president Oliver Moon said the reporting requirements were making small businesses more professional.
“This should, in time, mean less small business failures,” he said.