ASIC re-emphasises the duties of "straw" directors

News Desk

If you don't intend to be involved in the management of a company, don't be a director. That's the message from ASIC, when it banned a "straw director" from the management of any company for five years.

Australia’s financial and companies regulator ASIC has made an order against a person it describes as “a straw director” who was a director but did not pay attention to how the companies were run.

Three companies have failed owing more than 1.5 million Aussie Dollars and Sam Casella, of Bossley Park, New South Wales has now been banned from the management of companies for five years.

Between December 2015 and March 2023 Casella was a director of three companies:
• Roundelectrics Pty Ltd (ACN 160 411 389);
• Spec Electrical Group Pty Ltd (ACN 609 669 310); and
• Quattro Constructions Pty Ltd (ACN 642 288 953).
But he had little or know knowledge of the companies’ activities

ASIC found that Mr Casella acted improperly and failed to meet his obligations as director when he:
• agreed to become the “owner” of assets and failed to carefully consider or enquire about what would be required of him;
• was unaware that he was a director of Roundelectrics Pty Ltd from 26 August 2016 until 1 March 2022;
• would sign documents concerning Roundelectrics Pty Ltd on instructions of an alleged shadow director without reading the documents;
• had no knowledge of the affairs of Roundelectrics Pty Ltd; and
• lacked control and accountability concerning Roundelectrics Pty Ltd which led to him being involved in:
◦ the failure to keep proper records
◦ the transferring of assets without proper consideration
◦ insolvent trading
◦ significant debts owed to statutory bodies.

At the time of ASIC’s decision, the three companies owed a combined total of AUD1,521,320.21 to creditors, including AUD1,048,044.2 owing to the Australian Taxation Office and other statutory creditors.

ASIC gave paid assistance to the liquidator of Spec Electrical from the Assetless Administration Fund and the liquidators’ report provided information upon which ASIC was able to rely.

It is well settled in Australian law that nominee and absentee directors will not be excused liability because they did not know what was happening in their companies.