Public company fined $300,000 for breach of Corps Act reporting and officer obligations

ASIC has secured one of the largest penalties we have seen recently for breaches of financial reporting, officer obligations and meeting requirements.

Dongfang Modern Agriculture Holding Group Limited (Dongfang) was fined $300,000 by the NSW Local Court for failing to meet its financial reporting obligations and to have the required number of company officers.

Dongfang, a public company:

• Failed to lodge its annual report for the financial year ending 31 December 2019 and its half-yearly report for the period ending 31 December 2019;
• Failed to hold an annual general meeting for the 2019 financial year;
• Failed to report to its members for the 2019 financial year; and
• Did not have a company secretary, or the minimum three directors.

These are all requirements of Dongfang as a public company.

This is the latest in a string of recent actions by ASIC in relation to core corporations act requirements and comes just days after ASIC laid charges against Griffin Coal, an Indian owned Australian coal mine.  

ABC News has reported that the charges relate to a failure by Griffin to post updated financial statements dating back to 2018.

The ABC also reported that the company, indirectly responsible for producing a significant share of WA’s main grid power, faces the ASIC charges on top of legal battles with its main customer and workforce, and mounting debt.

ASIC has been increasingly active in pursuing prosecution of breaches of financial reporting requirements since the Hayne Royal Commission and the (now effectively abandoned) pivot of its enforcement activities towards litigation (the why not litigate approach).

It is expected that a softening of some elements of ASIC’s enforcement approach will occur, but we are not seeing it in relation to the prosecution of strict liability and other core company obligation offences and provisions.  Previously, these were less often litigated.  Now, litigation and prosecution is a very real possibility.

We have previously written about the increased enforcement in this space here.

Importantly, there are steps that can be taken if non-compliance with these obligations is discovered, and a proactive approach can avoid prosecution, litigation and reputation and financial impacts.  

If you identify these issues do something about it and seek expert advice.

ASIC’s media release in relation to Dongfang can be accessed here.

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