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The Australian Securities and Investments Commission (ASIC) is reminding small business company directors of their duty to manage company money and assets responsibly and in the best interests of the company. ASIC also encourages directors to seek early professional advice if they are uncertain about their legal obligations, to avoid costly enforcement actions and protect the long-term viability of their businesses.
( Image: ACB News) █ ｜By ACB News / Jane The Australian Securities and Investments Commission (ASIC) has issued a reminder to directors of small businesses that they are legally obligated to manage company money and assets appropriately. Directors must not treat company funds as personal property, and any misuse of company resources may result in civil penalties, criminal prosecution, or disqualification from acting as a director. ASIC emphasised that early awareness of legal responsibilities—and seeking timely professional advice—can help directors make better decisions and avoid compliance failures. Misuse of company funds, such as diverting them for private expenses like school fees or personal travel, can lead to insolvency. This may severely impact employees, suppliers, tax obligations, and especially other small businesses that are creditors. Reports from registered liquidators showed that poor financial control—including personal misuse of company assets—was a contributing factor in 36% of corporate failures during the 2023–24 financial year. In early 2025, ASIC took action against several directors following investigations. A director of two construction-related companies was charged with dishonestly using company funds for personal benefit, resulting in unpaid debts to small business creditors after both companies entered liquidation. Another director was convicted for using company money to fund legal fees related to his personal bankruptcy. ASIC also prosecuted 34 individuals for 67 offences related to failing to assist liquidators, issuing total fines of $244,500. Beyond ASIC enforcement, directors may be held personally liable by the Australian Taxation Office for unpaid company taxes. Liquidators may also initiate civil proceedings if a director is found to have breached their duties. ASIC continues to support liquidators and takes action against directors who fail to provide records or cooperation. ASIC strongly encourages small business directors to proactively monitor company finances, act in good faith, and seek professional accounting or legal advice when in doubt. The regulator provides a Small Business section on its website, offering practical guidance to help directors understand their obligations and avoid enforcement action. Copyright Notice: ACB News reserves full copyright over all articles explicitly marked as "original" content. No media outlet, corporate website, platform, or app within Australia may reproduce, excerpt, adapt, or republish such content in any form without prior written authorization from ACB News. Any unauthorized use or reproduction—including via third-party platforms—will be considered an infringement. ACB News reserves the right to pursue legal action against any such violations. |
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