Treasury has released for consultation a draft Treasury Laws Amendment (ASIC Enforcement) Bill 2018 which will increase penalties for corporate and financial sector misconduct.

The draft legislation will increase the penalties for certain criminal offences in the Corporations Act, ASIC Act, and Credit Act to reflect the seriousness of the misconduct.

The changes include:

• increasing the maximum imprisonment penalties for certain criminal offences;
• introducing a formula to calculate financial penalties for criminal offences;
• removing imprisonment as a penalty and increasing the financial penalties for all strict and absolute liability offences;
• introduce ordinary criminal offences that sit alongside strict and absolute liability offences;
• modernise and expand the civil penalty regime by increasing financial penalties for contraventions and making a wider range of offences subject to civil penalties;
• harmonise and expand the infringement notice regime;
• introduce a new test that applies to all dishonesty offences under the Corporations Act;
• introduce relinquishment as a remedy available in civil penalty proceedings;
• clarify that the courts are to give priority to compensating victims over ordering the payment of financial penalties; and
• clarify that contraventions of section 184 of the Corporations Act can occur even when the relevant corporation gains an advantage from the contravention.

Penalties

The maximum financial penalties for criminal offences in the Corporations Act where the maximum term of imprisonment is less than 10 years, will be calculated by multiplying the maximum term of imprisonment in months by 10 for individuals, and a further 10 for bodies corporate

The maximum financial penalties for criminal offences in the Corporations Act where the maximum term of imprisonment is 10 years’ or more will be:

• for individuals, the greater of: – 4,500 penalty units; or – the benefit derived or detriment avoided because of the contravention, multiplied by three;

• for bodies corporate, the greater of: – 45,000 penalty units; – the benefit derived or detriment avoided because of the contravention, multiplied by three; or – 10 percent of the annual turnover of the body corporate.

A penalty unit is currently $210.

The maximum financial penalty for a contravention of a civil penalty provision in the Corporations, ASIC, Credit and Insurance Contracts Acts, and Credit Code, will be:

• for individuals, the greater of: – 5,000 penalty units; or – the benefit derived or detriment avoided because of the contravention, multiplied by three;

• for bodies corporate, the greater of the following: – 50,000 penalty units; – the benefit derived or detriment avoided by the body corporate because of the contravention, multiplied by three; – 10 percent of the annual turnover of the body corporate, but to a maximum monetary value of 1 million penalty units.