At a time when the share market is volatile, it is important to understand who is liable for a company’s ASX announcements.

In Australian Securities and Investments Commission v Narain [2008] FCAFC 120 the Full Court of the Federal Court of Australia decided that the CEO of Citrofresh International Limited was liable for allegedly misleading statements made to the ASX even though they were made in the name of the company secretary.

The court decided that s 1041H of the Corporations Act is infringed if an officer of a company prepares a misleading statement that he intends to be published but does not publish himself, instead instructing the company secretary to do so.

The majority judgment said:

"98 In the present case…Mr Narain was personally liable for the contravention by having authorised Mr Hanlon [the company secretary] to send the announcement to the ASX. Mr Hanlon’s actions were ministerial, as an organ of the Company or an agent of Mr Narain, and quite independent of any liability on his own behalf.

99 …Mr Narain participated in the preparation and drafting of the announcement, adopted and approved the contents as well as authorising and directing the transmission of the document to the ASX.

100 It is plain in our view that Mr Narain was personally liable for any contravention of s 1041H."

The court also decided that the statements were "in relation to" the company’s shares as they affected the share price, even if they did not discuss the shares.