What are the consequences if I fail to submit a Report as to Affairs (RATA) and deliver books of the company to the liquidator?

Every director of a company is required to (amongst other matters):

1. Submit a RATA to the liquidator or provisional liquidator within 14 days after a wind up order or other order appointing the provisional liquidator is made pursuant to sections 475(1), (4) of the Corporations Act 2001 (Cth) (the Act); and

2. As soon as practicable after the court orders that a company be wound up or appoints a liquidator or a provisional liquidator, or a company resolves that it be wound up:(a) Deliver to the liquidator or to the provisional liquidator all books in the director’s possession that relate to the company other than books which the director is entitled to retain; an(b) If the director knows where other books relating to the company are, tell the liquidator or provisional liquidator where those books are;

pursuant to section 530A(1) of the Act.

The consequences of failing to submit the RATA and deliver the books are:

1. section 475(1) of the Act – 25 penalty units ($4500) and/or 6 months imprisonment; and

2. section 530A(1) of the Act – 50 penalty units ($9000) and/or 12 months imprisonment.

Generally, the courts are reluctant to order imprisonment and may order the director to pay a fine. However, this depends on the circumstances surrounding the offence.

Pursuant to sections 475(11) and 530A(6B) of the Act, a director will not be deemed to have committed the offences if they have a reasonable excuse.

A reasonable excuse refers to any “physical or practical difficulties in complying with a requirement”.[1] In Jovanovic v Australian Securities and Investment Commission (2001) TASSC 6 Cox CJ stated at paragraph 9[2]:

“…the appellant’s failure to complete and lodge the report within the initial 14 days was reasonably excused by his undoubted ignorance of the day to day operations of the company and his inability to access the books of the company which were then in the possession of the earlier administrator of the company, Mr Green.  I think it was clearly impossible for the appellant to have provided meaningful answers to the questions posed in the prescribed form given his unchallenged evidence about his involvement with the company and his inability to view the books at that time.”

In Leydon v Forrest[3] the Supreme Court of South Australia held that it was not a reasonable excuse to say that the officer had not been paying attention to the affairs of the company. In this case, a company secretary had been absent from the state and did not know that a winding up order had been made.

Recently, JHK Legal represented a company director who was charged under sections 475(1) and 530A(1) of the Act. It was his first offence and he did not have a criminal history.

We were successful in achieving the following great result for the client:

1. The offence under section 530A(1) of the Act was dismissed;
2. A guilty plea was entered in respect of the offence under section 475(1) of the Act.
3. No conviction was recorded.
4. No fine was ordered.
5. A good behaviour bond for 6 months was granted and he was released on his own recognisance.
6. No order as to (legal) costs was made.

Offences under sections 475(1) and 530A(1) of the Act are serious and criminal penalties apply if you are found guilty. It is important to act in a timely manner as a director has a continuing obligation to the liquidator or provisional liquidator which essentially means that he or she must still comply with these sections after being charged.

Author: Aleksandra Symenovych

[1] Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 Per Dawson J at 336

[2] Jovanovic v Australian Securities and Investment Commission (2001) TASSC 6 at paragraph 9

[3] Leydon v Forrest (1980) 4 ACLR 502